Saudi Exchange aspires to be exclusive venue for Aramco IPO: CEO

RIYADH - 26 October 2017: Saudi Arabia’s stock exchange aspires to be the exclusive venue for the listing of Saudi Aramco’s IPO-ARMO.SE initial public offering and the market has sufficient liquidity to absorb the share sale, the exchange’s chief executive said on Thursday.

Such a listing would dwarf anything else on the bourse.

Saudi officials have said Aramco plans to list the oil giant’s shares on the local bourse and on one or more foreign market in a bid to help raise the kingdom’s profile in the eyes of overseas investors, a key part of its goal to reform the economy.

But CEO Khalid al-Hussan said the local exchange, known as Tadawul, aspired to be the exclusive venue for the listing of the share sale and could absorb all of it.

Tadawul was working hard to convince Aramco of the merits of such a move, but the company had not yet made a decision, he said.

“Tadawul is the main exchange in the region and as the most liquid among the largest 25 exchanges in the world and among the 10 largest emerging markets, Tadawul aspires to be the exclusive venue,” he said at an investment conference in Riyadh.

Saudi Arabia expects to value the state-owned oil producer at a minimum of $2 trillion, in what could be the world’s biggest initial public offering, the centerpiece of its Vision 2030 plan to diversify the economy away from oil.

But some analysts have expressed concern about the risk of the share sale swamping the local market.

The market capitalization of Tadawul is around $340 billion. Saudi Basic Industries Corp 2010.SE (SABIC) the largest company listed to date with a market capitalization of about $78 billion.

“The exclusive listing of Aramco on the Saudi stock exchange is possible but at a speculated valuation of around $2 trillion it will be too large for Tadawul to solely handle the listing of even a 5 percent stake sale,” said Nitin Garg, senior analyst at SICO Bahrain. “The Saudi market does not have sufficient liquidity to absorb such a large initial public offering.”

Aramco’s chief executive said on Tuesday that domestic and international exchanges such as New York, London, Tokyo, and Hong Kong have been looked at for a partial listing of the state oil giant. The company has said it plans to list in 2018.