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Saudi Aramco's Potential SABIC Deal to Impact IPO Timing

Saudi Aramco's Potential SABIC Deal to Impact IPO Timing
(Mohamed Ahmed Soliman | Dreamstime)

Friday, 20 July 2018 06:35 PM

Saudi Aramco's potential acquisition of a stake in Saudi petrochemicals maker SABIC would affect the time frame of its own planned initial public offering, Aramco's chief executive Amin Nasser said in a television interview on Friday.

Saudi-owned Al Arabiya television cited Nasser as saying that buying a stake in a petrochemicals company would make the state oil giant less vulnerable to price volatility.

Aramco said on Thursday it is looking to buy a strategic stake in SABIC, a move that could boost the state oil giant's market valuation ahead of a planned IPO.

Nasser said that Aramco is ready to list but that the timing is up to the government to decide, according to Al Arabiya.

Aramco said on Thursday in a statement that it was in "very early-stage discussions" with the kingdom's Public Investment Fund (PIF) to acquire the stake in SABIC in a private transaction. It has no plans to acquire any publicly held shares, it said.

Riyadh-listed Saudi Basic Industries Corp (SABIC), the world's fourth-biggest petrochemicals company, is 70 percent owned by the PIF, Saudi Arabia's top sovereign wealth fund. It has a market capitalisation of 385.2 billion Saudi riyals ($103 billion).

Reuters reported on Wednesday that Saudi Aramco had invited banks to pitch for an advisory role on the potential acquisition of a strategic stake in SABIC, citing two sources with direct knowledge of the matter.

The Aramco IPO is the centerpiece of an ambitious plan championed by Crown Prince Mohammed bin Salman to diversify Saudi Arabia's economy beyond oil.

Preparations for the IPO, which may be the biggest in history, have slowed, with some sources close to the process saying that the plans for a domestic and international listing might be pushed further into next year or beyond.

A final decision has yet to be made by Prince Mohammed, who oversees the kingdom's economic and oil policies, the sources said. Saudi Arabia's energy minister, Khalid al-Falih, said last month that it would be "nice" to see Aramco floated in 2019, adding that the timing was not critical to the government.

Aramco plans to boost investments in refining and petrochemicals to secure new markets for its crude and sees growth in chemicals as central to its downstream strategy to lessen the risk of a slowdown in oil demand. 

© 2019 Thomson/Reuters. All rights reserved.

   
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Saudi Aramco's potential acquisition of a stake in Saudi petrochemicals maker SABIC would affect the time frame of its own planned initial public offering, Aramco's chief executive Amin Nasser said in a television interview on Friday.
saudi, aramco, sabic, deal, impact, ipo, timing
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2018-35-20
Friday, 20 July 2018 06:35 PM
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