Saudi Aramco is pushing back a planned Riyadh initial public offering of its energy-trading business, a deal that would have ranked as one of the world’s largest share sales this year, people with knowledge of the matter said.
The state-controlled oil company has significantly slowed down preparatory work on the deal in recent months, according to the people, who asked not to be identified because the information is private. It hasn’t set a new timeline for the listing, which may be postponed until next year unless the market improves, one of the people said.
Aramco had been planning to list the business in late 2022 or early this year and was considering seeking a valuation of more than $30 billion, Bloomberg News reported previously. It now feels it could be difficult to list such a large business on the Riyadh bourse at the moment, the people said.
The Saudi firm also wants to take more time to complete the integration of its main trading unit with the trading arm of its US refining business Motiva Enterprises LLC before proceeding with the IPO, the people said.
Saudi Arabia, typically one of the Gulf’s biggest and busiest listing markets, has been very quiet this year amid concerns over global economic growth, while other exchanges like Abu Dhabi have stepped into the limelight. Just $72 million has been raised from listings in Riyadh, the least since 2014, data compiled by Bloomberg show. This time last year the IPO haul stood at almost $4 billion.
Aramco has been working with banks including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley as it studies the potential IPO, people with knowledge of the matter have said.
Deliberations are ongoing, and details of the offering could change, the people said. A representative for Aramco declined to comment.
Profits from trading oil, gas and refined fuel have soared recently. BP Plc, Shell Plc and TotalEnergies SE together made $37 billion of trading income last year, according to Sanford C. Bernstein & Co., as energy prices and volatility jumped following Russia’s invasion of Ukraine and as economies recovered from the Covid-19 pandemic.
Still, very few energy traders are listed, and the Big Oil firms don’t disclose much information about their dealing units. Aramco’s own traders had little enthusiasm for an IPO when the listing plans were revealed, people with knowledge of the matter said. Traders can often have deals that don’t go their way while recouping those losses with even bigger gains later in the year, making the close scrutiny faced by listed companies a challenge.
--With assistance from Paul Wallace and Anthony Di Paola.
Author: Dinesh Nair, Julia Fioretti and Matthew Martin