Bankers testing waters on Saudi Aramco secondary listing, see SGX as option

Saudi Aramco is looking to sell as much as a US$50 billion (S$67 billion) stake, or 2.5 per cent of the company. PHOTO: REUTERS

SINGAPORE - As oil prices race towards US$100 a barrel, investment bankers touring the Middle East in search of lucrative deals are nudging Saudi Arabia's leadership to fast-track its plans for a secondary listing for the world's most valuable oil company, industry sources have told The Straits Times.

Saudi Aramco is looking to sell as much as a US$50 billion (S$67 billion) stake, or 2.5 per cent of the company, and has held talks on selling the additional shares on the Riyadh stock exchange and a secondary listing, possibly in London or Singapore, the Wall Street Journal reported on Friday.

A Singapore Exchange (SGX) spokesman, when contacted by ST, said: "We do not provide any comments as listing applications made to SGX, if any, are confidential." Aramco declined to comment.

ST understands that a review committee was set up in Saudi Arabia last year and it had discussed a potential secondary listing, but no further action was taken at the time.

"It is completely possible that if prices hit US$100 tomorrow, the government will make an announcement of some sort, because at the end of the day, they're a key shareholder of the company," an industry source told ST.

The state oil giant's fortunes have changed dramatically since its record-breaking 2019 initial public offering (IPO) on Saudi exchange Tadawul, which raked in more than US$29.4 billion.

After enduring a painful oil price slump in the early months of the Covid-19 pandemic when prices dived into negative territory, producers worldwide are now enjoying ballooning profits as fears of a global supply scarcity keeps oil on the boil.

"Oil prices are buoyant and Aramco's production is rising, so, yes, it seems like good timing," said Dubai-based Robin Mills, chief executive of energy consultancy and investment advisory Qamar Energy. "Discussions have been going on for a while already of course."

Though talks to sell more shares in Saudi Aramco are understood to be at a preliminary stage, ST understands that SGX has already established good working relationships with the senior leadership at the company.

Media reports in February 2017 had said that at the time, SGX had held talks with Saudi Aramco on the possibility of participating in a secondary listing.

The Singapore bourse had started laying the groundwork as soon as then Deputy Crown Prince Mohammed bin Salman shared his ambitions about selling a stake in the national oil company, during an interview with The Economist in January 2016.

"The opportunity is there for SGX, with Hong Kong in flux, but it is going to be challenging for it, given the Singapore market's size," the industry source said.

In an interview with prominent Saudi business and economic publication Al-Ittihad Al-Iktissadi in 2017, SGX chief executive Loh Boon Chye said Singapore is a multi-ethnic and multi-religious country, and would provide a stable and politically neutral listing backdrop.

Economic ties between Saudi Arabia and Singapore have been growing in recent years, and Second Minister for Trade and Industry Tan See Leng and Saudi Arabia's Minister for Transport and Logistic Services Saleh bin Nasser Al Jasser co-chaired the inaugural Saudi Arabia-Singapore Joint Committee Ministerial Meeting in Riyadh in December 2021.

The ministers highlighted the vast potential for strengthening cooperation and discussed various initiatives in the areas of transport, infrastructure and logistics, energy and industry, and the digital economy.

A memorandum of understanding was also inked between Saudi Arabia's Ministry of Energy and Singapore's Ministry of Trade and Industry to collaborate on areas such as energy efficiency and conservation, research, development and deployment, and capacity building in low-carbon technologies, such as hydrogen and carbon capture, utilisation and storage.

Last month, Saudi Foreign Minister Prince Faisal Farhan Al Saud also made an official visit to Singapore.

Mr Tom James, chief executive of Singapore-based fintech-enabled fund manager TradeFlow Capital Management, said of Singapore as a venue for a Saudi Aramco secondary listing: "Singapore is a great base for Asia business, and has been attracting a lot of family office wealth, and the majority of global financial institutions have offices in Singapore."

Mr James, who is also the chief investment officer at the fund, added: "Some Saudi Arabian stock market ETFs (exchange-traded funds) I track were up 39 per cent last year and still going up.

"Not only is Saudi Aramco an interesting company from an investment standpoint, but Saudi Arabia is also an attractive country to invest in, and the economy is growing amazingly with such a young and highly educated population."

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