Aramco IPO in focus as Crown Prince starts UK, US trips: report

Saudi Crown Prince Mohammed bin Salman’s visit to Britain and the United States could help shape the decision on the location of Saudi Aramco’s initial public offering, Reuters reported, adding that its sources say the chances of London and New York hosting the IPO appear to be receding.

While London and New York have for long been the top contenders to host the international leg of Aramco IPO, lately Hong Kong is seen emerging as a more likely choice as Saudi Arabia may want to help Asian nations that are expected to become “cornerstone” investors, including China and Japan, said two sources familiar with the matter.

The listing requirements by London and New York call for greater disclosure of information, in comparison to Hong Kong exchange.

A final decision has yet to be made by Prince Mohammed, the sources said.

A number of issues such as complexity of the listing, legal concerns, and conflicting recommendations by different advisers have delayed the decision-making process, they added.

Aramco has held that its IPO plans are on track and it is still reviewing the international listing options.

“I think the IPO, as highlighted many times before, is progressing very well,” Aramco CEO Amin Nasser said at CERAWeek conference in Houston on Tuesday.

“The questions being asked are when and where, in terms of where are going to be listing in addition to Tadawul, and when. This is shareholder decision,” he added.

Meanwhile, Hong Kong Exchanges and Clearing said it is well positioned for the listing of Aramco.

“We have not received any indication of how the company is likely to proceed with its international listing plan,” Reuters quoted the city’s exchange operator as saying.

Prince Mohammed will arrive in London on Wednesday for talks with British Prime Minister Theresa May and other senior ministers.

He is expected to travel to the United States from March 19 to the first week of April, where he will meet US President Donald Trump, and make stops in New York, Boston, Houston and San Francisco among other cities.

Senior Saudi officials, including Energy Minister Khalid Al-Falih and Aramco CEO Amin Nasser, are likely to accompany the Crown Prince on his foreign tour.

Both May and Trump want to attract the Aramco IPO, which could be the largest-ever.

Britain has proposed loosening rules on listing state companies by creating a new category for such firms to accommodate Aramco.

“The British want a strategic partner post-Brexit,” said a third source familiar with the Crown Prince’s trip.

In November, Trump appealed for Saudi Arabia to list Aramco’s shares in the US, describing the listing as a priority for Washington.

“If the Aramco deal is going to have any credibility a listing on either New York or London has to happen,” a senior Gulf-based banker familiar with the IPO process was quoted as saying.

“Anything else will not cut it for international investors, in terms of transparency and corporate governance.”

The decision on the listing venue must be taken by March or April at the latest if the IPO is to be carried out in October or November, otherwise it could be delayed until 2019, sources familiar with the IPO discussions have said.