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Are U.S. Exchanges Vying for Aramco IPO Next Year?

Traders Magazine Online News, August 15, 2017

John D'Antona Jr.

In what is sure to be the biggest global IPO in history, U.S. exchanges are jockeying to be the North American listings hub for Saudi Arabia’s Aramco.

While the Saudis plan to offer up to 5% of Aramco in the IPO, or $100 billion, a portion is certain to take place on the Tadawul, Saudi Arabia’s own stock exchange, U.S. exchanges have been vying to get their name attached to the landmark IPO too. According to one person with knowledge of the matter, NYSE, Nasdaq and the London Stock Exchange have all been actively pursuing Aramco.

“I heard that the listing of Aramco is so very important to NYSE and Nasdaq,” said the person on condition of anonymity. “The story is that while the exchanges had their official delegations at a meeting with Aramco, Adena Freidman herself was present – that’s how important it is to them.”

Nasdaq declined to comment for this story but did confirm it has an existing technology relationship with Tadawul dating back to 2013.

An NYSE spokesperson declined to comment.

Saudi Aramco is officially known as the Saudi Arabian Oil Company, or colloquially as Aramco (formerly Arabian-American Oil Company). It is a Saudi Arabian national petroleum and natural gas company based in Dhahran. Saudi Aramco's value has been estimated at between US$1.25 trillion and US$10 trillion.

Saudi Aramco has both the world's second largest proven crude oil reserves, at more than 260 billion barrels and second largest daily oil production.

Initially, the IPO was scheduled for early next year but sources said that any IPO won’t come before late 2018 or early 2019.

According to local media reports, the IPO process is now bearing down to the crucial issue of whether the New York Stock Exchange (NYSE) or London Stock Exchange (LSE) would be the better venue in the West. Recent reports suggest that, while some advisers think London is the better market, with the LSE showing signs of flexibility to accommodate Aramco’s record-breaking share issue, the final decision will be as much a political one as an investment choice.

Given the recent lovefest between U.S. president Trump and his successful visit to the Kingdom in May, market pundits believe that New York and the U.S have the upper hand in landing a portion of the IPO.  

“The IPO is the most anticipated event in global equity markets in recent history. The speculative milieu of this event is fostering its own brand of urban legend within the world’s financial services community,” Edward Burton, president and chief executive of the US-Saudi Arabian Business Council, was quoted as saying in the Arab News.

While unsure of just how this listing will play out exactly, he did offer some thoughts.

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