The Tell: Saudi Arabia thinks about shelving international IPO for Saudi Aramco: reports

It’s unclear whether what had been touted as one of the world’s largest-ever initial public offerings will ever take place.

Saudi Arabia is considering shelving a plan to list state-owned oil company Saudi Aramco in New York, London or any other international exchange as it instead ponders an offer by a Chinese investor to acquire a stake in the world’s largest energy company, according to multiple news reports.

The Financial Times, citing people familiar with the IPO preparations, first reported Friday that talks over a private sale to foreign governments including China and other investors have picked up steam in recent weeks.

The plan to sell 5% of the company’s shares on international markets has been spearheaded by 32-year-old Crown Prince Mohammad bin Salman, the heir apparent to the Saudi throne who has outlined a multipronged plan to wean the kingdom off its dependence on oil revenues.

The Wall Street Journal reported the company is also considering conducting a two-stage IPO, with a listing on Riyadh’s Tadawful exchange in 2019 and an international listing a year later. The Saudis had long been planing the IPO for 2018, with New York and London the leading candidates.

The Journal reported that people familiar with the matter said nothing had been decided and that the international IPO might still move forward. Saudi officials have estimated an IPO, if it did proceed, could be as large as $100 billion, with proceeds set to plump up the country’s sovereign-wealth fund.

A spokesman for the company told the Journal that that the IPO process “remains on track” but that a “range of options, for the public listing of Saudi Aramco, continue to be held under active review.”

News reports regarding the outlook for the IPO temporarily weighed on oil futures

LCOZ7, +1.69%

CLZ7, +1.51%

 during Friday’s trading session, analysts said, on concerns that a decision not to list the company would rob Riyadh of an incentive to keep upward pressure on oil prices. Weakness was short-lived, however, as a private share sale would provide the same incentive to keep oil prices up, analysts said.

See: How Saudi Aramco IPO could be ‘highly deflationary’ for oil