When the Saudi Aramco IPO, the largest in the world, was first announced back in 2016 it was always going to be a push to meet the original deadline of 2017/2018.
The Crown Prince, Mohammed bin Salman, had an original vision of selling a five percent stake in the company at a valuation of two trillion US dollars.
Plans for the IPO however fell flat, in large part due to the fact that Aramco did not abide by certain international standards that would allow it to be listed. These included a full three years worth’ of appropriately kept books as well as formal paperwork detailing the corporate structure, incorporation and bylaws.
Because of this, it came as no real surprise that the date of the offering was continuously pushed back as Aramco worked to meet the necessary standards for the IPO, as well as completing the purchase of the Saudi Arabian Basic Industries Corporation (SABIC).
Headquartered in Riyadh and previously majority owned by the PIF, SABIC is a provider of downstream diversified petrochemical services. The company has operations in over 50 countries and has recorded annual sales of $45 billion.
Aramco purchased a 70% majority stake in SABIC for a total of SAR 259.125 billion, unlocking significant capital for the Public Investment Fund and also adding to the value of Aramco as an entity.
Fast forward to today and the Aramco IPO has reemerged into the spotlight; the company revealed a net income of $46.9 billion for the first half of 2019, and while this was actually down compared to previous years due to lower oil prices and rising operational expenses, it still stood Aramco in good light as the world’s most profitable company.
The IPO has now been pegged to be floated in late 2020 or early 2021, and forward steps have been made with international banks beginning to compete for a place in the deal.