The world’s largest initial public offering is on hiatus. The spending it was to enable may not be.
Saudi Aramco signalled another potential delay for the world’s largest initial public offering after it started talks this week to buy a stake in a local petrochemical company.
The state-owned oil company said it may buy a strategic stake in Saudi Basic Industries from the country’s sovereign wealth fund. Sabic, as the chemical company is known, carries a market value of little more than $100 billion and the sovereign wealth fund controls a 70 per cent stake.
Amin Nasser, Aramco’s chief executive officer, said in an interview that the company is still in the early stages of talks and a deal is not certain.
Amin Nasser, Aramco’s chief executive officer
“A potential Sabic deal would affect the time frame for Saudi Aramco’s initial public offering,” Mr Nasser told Arabiya television in an interview.
A stake in a chemical company like Sabic makes Aramco less vulnerable to volatile oil prices, and would be positive for its revenue, Mr Nasser told Arabiya. The remarks raise the spectre of further delay for an IPO that could raise as much as $100 billion.
The Saudi government planned to sell about 5 percent of Saudi Aramco on public stock markets. If the oil giant could have fetched a $2 trillion valuation — and there has been skepticism over that figure— the kingdom would have received roughly $100 billion.
The three new moves, if they were to happen, could yield almost as much as Saudi Aramco’s I.P.O. would have. The Saudi government would then have the financial firepower to pursue its grand economic goals, collectively known as Vision 2030.
That means money to invest in Silicon Valley start-ups. Or to create a giant new city that runs on clean energy and robots.
Testa comes in
Or to even help Elon Musk take Tesla private. Saudi Arabia already has a nearly 5 percent stake in the carmaker, and Mr. Musk has said it is interested in helping fund a buyout. But the Public Investment Fund has yet to send such a signal, and is reportedly in talks to invest in a Tesla rival.