03.06.201602:24:00UTC+00Khalid Falih Clarifies Over Aramco Ipo

New oil minister of Saudi Arabia, Khalid al-Falih, yesterday, speaking on the side lines of his first OPEC meeting as minister in Vienna provided some details about Aramco IPO, which is the cornerstone of new policies from Saudi Arabia’s new strongman, deputy crown prince Mohammad bin-Salman.

Prince Salman has launched Vision 2030, which will reduce the country’s dependence on oil and its volatility. Part of the plan is to create a sovereign wealth fund, which will be largest in the world, with approximately $3 trillion in value. Saudi state owned oil giant Saudi Aramco will play a key role in it. He plans to launch public offering of Aramco, which is expected to make it priced at $2 trillion.

Key takeaways from Mr. Falih –

• Saudi Arabia will float less than 5% of stake in IPO offering. This was however already known.
• He clarified that government will keep making decisions over production and capacity.
• IPO is likely to be launched in 2018, since the country has to remove many obstacles to make it ready, since the company is closely intertwined with the government.
• Taxation and accounting would require extensive rewiring and projects taken on behalf of the government would have to be delineated. Since many times, Aramco is called up on to use money to build schools, stadiums and infrastructure.

However, there are still lot of grey areas that need to be addressed like the IPO structure, voting rights, board and where can it be launched.