Saudi Arabia plans to sell less than 5% of its state oil company Saudi Aramco through an initial public offering (IPO), Deputy Crown Prince Mohammed bin Salman has said.
He said in a television interview he expected Aramco, the world’s biggest energy company, to be valued at more than $2tn and that he wanted it to be transformed into a holding company with an elected board.
Subsidiaries of the company would also be sold by IPO, as part of a privatisation drive and to bring more transparency to the oil giant, Prince Mohammed said. “If one per cent of Aramco is offered to the market just one percent it will be the biggest IPO on earth,” he said.
“Less than 5 per cent from the parent company … we are trying to separate it and make Aramco a holding company,” Prince Mohammed said.
The listing of Aramco would be on the Saudi stock market, he said, adding that one idea being studied was to set up a fund in the US market which would buy shares in Aramco to help bring liquidity.
It is not clear which of Aramco’s ventures might be involved in a sale but the range of candidates is wide. Aramco and its subsidiaries own or have an equity interest in more than 5mn bpd of refining capacity.
Earlier in the month, Prince Mohammed, the 30 year old son of Saudi King Salman bin Abdulaziz, also elaborated on his plans of boosting the Public Investment Fund (PIF) – the world’s largest sovereign wealth fund for the kingdom’s most prized assets – which will eventually control more than $2tn and help wean the kingdom off oil dependency.
“IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince said in an interview to Bloomberg.
“What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil,” Prince Mohammed said.
