Saudi Arabia in talks to sell 1% Aramco stakes

The revenue generator of Saudi Arabia, Saudi Arabian Oil Co. or Aramco—as it is popularly known, is in talks with an unnamed global energy company to sell 1 per cent stake of the company.

The Crown Prince of Saudi Arabia and chairman of Aramco, Mohammed bin Salman in a television interview said that an announcement would be made in a year or two.

The move comes after a failed attempt of Aramco’s initial public offering in 2019. In the IPO, Prince Mohammed proposed an international listing of up to 5 percent.

The attempt was a failure as the international funds found the stocks too pricey at a market valuation of $1.7 trillion and were also skeptical about the governance of the country.

The recent development could be seen as another attempt at monetizing Saudi Arabia’s oil assets. Under Prince Mohammed, Saudi Arabia is seen making efforts in bringing foreign investors to the country.

Experts believe that an Asian country would be better suited for the deal. 

WSJ reported that Hasnain Malik, a Dubai-based emerging-markets equities strategist at Tellimer, said, ““Any party interested in a 1% stake in Aramco likely comes from Asia, where the company’s biggest customers are located. It is not clear what are the benefits of such a tiny equity stake in a national champion of another country.”

He further said that China might be motivated to deepen its relationships in a region where it has historically exerted little influence, despite relying on hydrocarbon exports.

(With inputs from WSJ)

Picture Credits: WSJ