Saudis to seek other means after scrapping oil IPO
Saudi Arabia’s decision to shelve what was billed as the biggest share sale ever is a major blow to the credibility of Crown Prince Mohammed bin Salman but there are other ways to finance reforms to strengthen the economy, bankers and investors say.
The initial public offering (IPO) of 5% of state-owned oil giant Saudi Aramco was a centrepiece of the crown prince’s plan to diversify the kingdom’s economy beyond oil by raising €865m for investment in other sectors.
The 32-year-old ruler, widely known as MbS, also promised that listing Saudi Aramco on international stock markets would help create a culture of openness in the secretive kingdom and make it more appealing to foreign investors. The decision to shelve the IPO raises doubts about the management of the process as well as the reform agenda, sapping the momentum generated by Prince Mohammed’s dramatic 2030 Vision announcement in 2016 that helped propel him to power in the world’s top oil exporter.
“The problem is the more it gets delayed and the more there’s not clarity on why it’s getting delayed and what the issues are, the more it undermines confidence,” said James Dorsey, a senior fellow at Singapore’s S. Rajaratnam School of International Studies.
Industry sources said both the international and domestic legs of the IPO had been postponed indefinitely.
The reform moves have been accompanied by a harsh crackdown on dissent, a purge of top royals and businessmen on corruption charges, and a war in Yemen.
