Briefing

Saudi Aramco postpones IPO three days before planned launch

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The delay follows drone strikes that briefly halved the company’s oil production, opposition from environmental groups and skepticism from some investors over the firm’s hoped-for US$2-trillion valuation. (Financial Times, The Guardian)

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Talking point: Aramco was looking to sell between one and three per cent of the firm. At the two per cent midpoint, the company can raise US$40 billion, which would make it the largest IPO in the world. There’s some indication this delay will only be for a few weeks, but even if it is brief, there are structural issues the firm is looking to address. Analysts have cut earnings-per-share estimates for Aramco by 13 per cent over the past 12 months. Some of the largest environmental groups are trying to pressure the banks helping Aramco prepare its IPO to drop the firm. Local investors are bullish on the company, but a number of foreign investors are skeptical of the valuation.