Saudi Aramco is rejecting a planned initial public offering in Riyadh of its energy trading business, a deal that would have ranked as one of the world’s biggest stock sales this year, people with knowledge of the matter said. matter
The state-controlled oil company has significantly slowed preparatory work on the deal in recent months, according to the people, who asked not to be identified because the information is private. It has not set a new timetable for the listing, which could be delayed 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 previously reported. He now believes it could be difficult to list such a large business on the Riyadh Stock Exchange at the moment, the people said.
The Saudi firm also wants to spend more time completing the integration of its main business unit with the trading arm of its U.S. refining business Motiva Enterprises LLC before proceeding with the IPO, the people said.
Saudi Arabia, normally one of the Gulf’s biggest and busiest stock markets, has been remarkably quiet this year amid worries about global economic growth, while other exchanges such as Abu Dhabi have stepped into the spotlight. Just $72 million has been raised from listings in Riyadh, the lowest since 2014, data compiled by Bloomberg show. At this time last year, the IPO was nearly $4 billion.
Aramco has been working with banks such as Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley as it considers a possible IPO, people with knowledge of the matter said.
Discussions are ongoing and details of the offer could change, the people said. An Aramco representative declined to comment.
Profits from oil, gas and refined fuel trading have soared recently. BP Plc, Shell Plc and TotalEnergies SE made a combined $37 billion in trading revenue last year, according to Sanford C. Bernstein & Co., as energy prices and volatility rose after the invasion of Ukraine by Russia and as economies recovered from the Covid-19 pandemic.
Still, there are very few energy traders on the list, and Big Oil companies don’t disclose much information about their trading 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 as they recoup those losses with even bigger gains later in the year, making the scrutiny facing listed companies a challenge.
–With the assistance of Paul Wallace and Anthony Di Paola.
