LONDON / RIYADH (Reuters) – Saudi Arabia has canceled plans for national and international stock market listing of state oil giant Aramco, which has been announced as the largest IPO in history.
Financial advisers working on the proposed listing have been disbanded as Saudi Arabia is turning its attention to a proposed acquisition of a "strategic stake" in local petrochemical maker Saudi Basic Industries Corp, two sources said. [nL8N1UE4VF]
"The decision to break the IPO was made some time ago, but no one can disclose it, so the statements are gradually made – delayed first and then canceled," said a Saudi-based source familiar with the IPO Plans said.
"The message we received is that the IPO has been canceled for the foreseeable future," said a second source, a senior financial adviser.
"Even the local float on the Tadawul Stock Exchange has been reset," said this person.
Early Thursday, Saudi Arabia's energy minister said the IPO had been canceled.
"The government remains committed to the public offering of Saudi Aramco under the appropriate circumstances and the appropriate time chosen by the government," Khalid al-Falih said in a statement.
Falih said Riyadh had taken action to prepare for listing and the timing would depend on factors such as favorable market conditions.
The proposed listing of the National Champion was central to the reform campaign of Crown Prince Mohammed bin Salman, which aimed to restructure the Kingdom's economy and reduce its dependency on oil revenues.
The Prince announced the plan to sell around 5 percent of Aramco's list in 201
A third industry source said the initial public offering has been discontinued for the time being, but could possibly be resumed in the future.
"It has been postponed until further notice," said the source.
Stock exchanges in financial centers such as London, New York and Hong Kong are vying for the international tranche of stock sales.
An The army of bankers and lawyers competed for the role of an IPO adviser, who is seen as the gateway to a number of other businesses that they expect to emerge from the Kingdom's extensive privatization program.
International banks JP Morgan, Morgan Stanley and HSBC worked as global coordinators, boutique investment banks Moelis & Co and Evercore were selected as independent advisers and White & Case law firm as legal advisers, Reuters said.
More banks were expected to be nominated, but no bookrunners were formally appointed despite the banks pounding the deal.
Lawyers, bankers and accountants are essential to the drafting of the Prospectus, a formal document containing key details of the Company.
Aramco had a budget to pay for consultants by the end of June. This was not renewed, said one of the sources.
"The advisers were put on standby," said a fourth source, a senior representative of the oil industry.
Sources have previously told Reuters that apart from the ratings, disagreements between Saudi officials and their advisors over the international stock market to be elected have slowed IPO preparations.
coverage by Clara Denina, Alex Lawler, Marwa Rashad and Rania El Gamal; Additional reporting by Stephen Kalin; Editing by David Evans, Toni Reinhold and Nick Tattersall