There's no way to know if the Aramco IPO will actually happen in 2 years, 5 years or never. But here's why Saudi Arabia and Aramco may still pursue it.
The plans for Aramco’s IPO have been changed and delayed so many times since Saudi Arabia’s crown prince Mohammad first in January 2016, that plenty of observers have questioned the plan and whether it would ever really happen.
FILE - In this June 23, 2018 file photo, Saudi Energy Minister Khalid al-Falih attends a news conference in Vienna, Austria. Saudi Arabia said on Thursday, Aug. 23, 2018 that it"remains committed" to an initial public offering of the state-run oilNow, once again, the Saudi government is insisting that IPO plans are still in the works. Khalid al Falih, the Saudi Oil Minister, has been cited by insisting that the IPO will happen within two years.
Other than King Salman and Prince Mohammad, al Falih is in the best position to know the future of the company. Al Falih is a former Aramco CEO and longtime employee. He is now chairman of the Aramco board, in addition to his roles as Oil Minister and member of various other governmental committees. This is the man who continues to insist that the world’s biggest IPO will, in fact, happen, despite the doubters.Politically, King Salman and his son, Prince Mohammad, have on the IPO.
Saudi Arabia and the prince want to build the world’s largest sovereign wealth fund. However, the Saudi fund, called the Public Investment Fund , is valued at less than $500 billion. That is less than half the size of Norway’s sovereign wealth fund. It is unlikely that Saudi Arabia will be able to grow the PIF substantially from government coffers in the near future, because the country is not running a surplus.
The Saudi leadership is historically successful at keeping major plans from being leaked. It is part of royal family’s ideal of keeping family business within the family. As a result, there is no way to know if the Aramco IPO will or will not happen in two years, five years or never. However, there are still reasons for Saudi Arabia and Aramco to pursue it.
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