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Saudi Aramco has to jump several hurdles for overseas listing: Vandana Hari

One of the big challenges for the Saudi government is how to raise additional money from Aramco sales to international investors. The manner in which the Saudi Aramco IPO was sold and pushed through to Saudi citizens and companies and institutional investors, have raised doubts whether the valuation we are seeing now -- almost $1.9 trillion -- is credible and reliable.

ET Now|
Dec 11, 2019, 05.28 PM IST
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If they do continue to aim for an international listing, they will need to become more transparent, says Vandana Hari, Founder, Vanda Insights. Excerpts from an interview with ETNOW.

Now that Saudi Aramco has gone public, do you think we will get better disclosures about the real state of reserves of the oil world?
Definitely the investors will be looking for that and to a large extent, we have seen a very gradual opening up, more transparency, more opening of the books in general by Aramco. I think that needs to continue. If they do continue to aim for an international listing, they will need to become more transparent.

But some of the concerns around that company centre around the future of oil. Here is a company which is completely reliant on oil business. In that context, is it a good long-term purchase? So that is a big overarching concern. To a smaller extent, there are other concerns as well which is government control of the company and also Saudi Arabia’s participation in OPEC which is quite frowned upon in the US and it was one of the stumbling blocks for the listing in New York. So there is quite a few hurdles the company will have to jump, if it wants to raise additional money from the international investors through overseas listings.

Saudi Aramco is the world’s most profitable company with the biggest market cap. Where next from here and what challenges would Aramco face?
I guess it was a heavily scaled-down IPO. They ultimately sold just 1.5% of the company instead of 5% that was orginially planned and raised about $26 billion about a quarter of what had initially been hoped for when the plans were unveiled.

I guess one of the big challenges for the Saudi government is how to raise additional money and preferably from Aramco sales to international investors. I guess the international investors will be looking very keenly at how the share performs, The entire manner in which this IPO was sold and pushed through to Saudi citizens and companies and institutional investors, have raised some doubts in the minds of the international community as to where the valuation that we are seeing now -- almost $1.9 trillion today -- is actually credible and reliable.

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