Middle-east Arab News Opinion | Asharq Al-awsat

Global Enthusiasm for Aramco’s IPO Ideas | ASHARQ AL-AWSAT English Archive 2005 -2017
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Cairo- “Opportunities come from crises”, is a quote by Churchill that Prince Mohammed Bin Salman said to confirm his positive vision for Saudi Arabia’s future. This came consistent to Saudi Arabia’s plan to privatize some assets and allocate the management of some facilities coinciding with the significant drop in oil prices and Saudi Arabia’s budget deficit.

Moreover, Deputy Crown Prince and Minister of Defense, Mohammed Bin Salman, announced during the interview with “The Economist” magazine that the idea of selling some shares in Aramco is being reviewed. He also announced the Kingdom’s intention to privatize the health-care sector and the education industry, in addition to some military sectors.

The interview with the Deputy Crown Prince, Mohammed Bin Salman, , head of the Supreme Council of the giant Saudi Arabian Oil Company, “Aramco”, on an initial public offering of some of the company’s shares or one of its projects, has stimulated investors’ appetite around the world.

Prominent analysts consider that such plans are consistent with the Saudi Arabian general and gradual trend towards implementing the economic reforms it has recently adopted.

In this context, Senior Research Analyst at Oppenheimer & Co Inc, Fadel Gheit, told the British newspaper, “The Guardian”, that this step is considered a strategic transformation in the Saudi policy.

However, these ideas also raised queries; analysts said they are waiting for answers. The queries included whether foreign investors will be allowed to enter the Saudi markets, mechanisms of action that might be followed by “Aramco” after selling its shares, and how it is going to distribute profits and demonstrate results.

Jason Tuvey, Middle East economist with the London-based research consultancy Capital Economics, said that it is hard for the West to assess Aramco accurately, yet Saudi Aramco “could be worth anything from US$1trillion to $10tn”.

Nevertheless, an official in one of the investment banks in Saudi Arabia said in a phone call with Asharq Al-Awsat that the statements made by the deputy crown prince surprised all companies working in the kingdom, and added that most of the banks will start preparing studies on the impact of these steps.