Daily Management Review

Mobius: Saudi Aramco will not hold an IPO in New York


11/10/2017


A few days after US President Donald Trump urged Saudi Aramco to conduct an IPO on the New York Stock Exchange, a well-known investor Mark Mobius, said that the placement in New York is unlikely, CNBC reported.



Alex Proimos
Alex Proimos
A number of exchanges, including in New York, London, Hong Kong and Singapore, are seeking to become a platform for the initial public offering of shares of the state oil company of Saudi Arabia. Saudi Arabian Oil Co. is considered one of the most expensive companies in the world.

Aramco said it will place its shares on the Saudi stock exchange Tadawul, as well as at one or two international sites in the second half of 2018.

"I think that New York has largely dropped out of the list of candidates because of the risk of litigation, London may also be out of the [IPO list of sites] because they do not want to disclose many of Aramco's internal operations, so it will be very interesting to see what will happen with this deal, "said Mark Mobius, executive chairman of Templeton Emerging Markets Group, in an interview with CNBC.

Recall, Saudi Aramco plans to sell up to 5% of the shares during the IPO next year. Aramco's IPO is part of Vision 2030, the plan of Crown Prince Mohammed bin Salman to diversify the economy, create the world's largest sovereign investment fund and reduce dependence on hydrocarbons.

In June, the Financial Times reported that lawyers warned Saudi Arabia that the placement in New York threatened with huge "judicial risks of any jurisdiction." In August, Reuters reported that the Middle East kingdom is inclined to hold an IPO in New York, despite the risks.

Donald Trump on Sunday wrote on Twitter that Aramco's IPO on the New York Stock Exchange would be "important for the United States."

According to Mobius, the decision, which draws much attention against the backdrop of the anti-corruption campaign and cleansing of elites in Saudi Arabia, seems to have not been accepted yet.

He added that "full and fair disclosure" will be a key factor for Aramco to attract investors, including Templeton.

Despite a cautious attitude towards Aramco, Mobius expressed optimism about Saudi Arabia. According to him, reforms in the kingdom are "long overdue", and the fact that the authorities stepped up efforts, is a good sign.

source: bloomberg.com






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