Bloomberg: Aramco's IPO tests Saudi confidence in bin Salman

Saudi Arabia's oil giant Aramco will test Saudi confidence in Crown Prince Mohammed bin Salman, according to a Bloomberg report.

The report said the Saudis were divided over the sale of Aramco shares, among those who saw it as loyal to the ruler and "national responsibility", and who it considered would not be attractive to local investors.

Aramco's initial public offering is expected to start in the coming days and comes weeks after an attack on its oil facilities.

A Saudi businessman (on condition of anonymity) said there was still uncertainty about the financial attractiveness of local investors, even after Aramco announced its intention to pay $ 75 billion in dividends next year.

A Saudi investment adviser (on condition of anonymity) was also quoted as saying that Aramco's "giant" valuation amid low oil prices made the offer unattractive.

Saudi Aramco is in support of the Saudi crown prince's economic reform plan, which has entered its fourth year, the report said.

In contrast, the report monitored the views of a number of Saudis who said they are waiting for a stake in Aramco, considering that investment in this company is "indiscriminate" in view of its history.

The report also noted that a number of Saudis see Aramco's IPO as an expression of loyalty to leadership and a historic moment to acquire shares in a global corporation.

Critics in prison
The report's writer pointed out that some critics of the sale of Aramco's shares ended up in prison, without revealing the charges against them, at a time when the suggestions that the company's valuation will not reach $ 2 trillion against the Crown Prince Mohammed bin Salman, who spoke about this It comes in many interviews.

The writer said there was pressure on the Saudis from their allies after the killing of journalist Jamal Khashoggi more than a year ago and the imprisonment of women's rights activists. However, some feel a national responsibility to invest in the Saudi company, according to the author.

The writer recalled the imprisonment of Saudi businessman Issam al-Zamil in September 2017, months after he published critical analyzes of the government's economic policies on social media, including Aramco's initial public offering.

Zamil published a series of tweets that were later deleted, saying it was impossible for Aramco's valuation to reach $ 2-3 trillion without including "even underground oil rights".

Another Saudi businessman, Jamil Farsi, was also arrested in 2017, several months after he made a public appeal not to sell Aramco during an IPO at the Jeddah Chamber of Commerce meeting. The charges against both Zamil and Farsi have not been made public, so it is not clear if the arrests are linked to their position on the IPO.

Hurdles
In fact, the IPO plan will continue to face significant obstacles, including the kingdom's ability to achieve the company's $ 2 trillion valuation.

Demand for stocks is likely to be affected by lower oil prices, as well as growing concerns among large institutional investors about spending money on fossil fuel companies that contribute to climate change.

Saudi Aramco is expected to meet with its advisors on October 17, according to people familiar with the scheme.

A nationwide advertising campaign will then be launched to raise investment from Saudi nationals, who have already proved they have the resources to make the IPO a success, according to the Bloomberg report.