DUBAI/RIYADH/LONDON (REUTERS) - Saudi Arabia may favour New York for the main foreign listing of state oil giant Aramco, even though some financial and legal advisers have recommended London as a less problematic and risky option, people familiar with the matter told Reuters.
A final decision on where to stage what could be the world's largest initial public offering will be taken by Crown Prince Mohammed bin Salman, who oversees the kingdom's economic and energy policies, the sources said.
Their comments point to internal disagreements between what some advisers are recommending and what the crown prince wants.
Prince Mohammed may choose to list Aramco on the New York Stock Exchange (NYSE) for "political considerations", given the longstanding relationship between Riyadh and Washington, the sources said. However, they added that financial and commercial factors would also play a role in the choice.
Aramco said in a statement that no decision has been taken yet on the listing venue, beyond the Saudi exchange Tadawul. "All options continue to be held under consideration. There is no timetable requirement for an immediate definitive decision," Aramco said in response to a Reuters request for comment.
Selling around 5 per cent of Aramco by next year is a centrepiece of Vision 2030, an ambitious reform plan to diversify the Saudi economy beyond oil, which is championed by Prince Mohammed.
Several advisers have recommended London for the main listing outside Saudi Arabia, sources familiar with the matter told Reuters last month, partly due to concerns that a US flotation would require greater disclosure of sensitive information on Aramco.
One senior industry source, however, said New York is likely to be the favoured option for the Saudi government and Prince Mohammed. "That is broadly correct," the source said, adding: "All awaits on the final shareholder decision."
Apart from New York and London, Hong Kong is also a contender, sources say. The flotation is expected to raise tens of billions of dollars which would be invested to help develop other Saudi industries.
The New York and London stock exchanges declined to comment.
Exchanges are vying to win part of the flotation as it will bring a major boost to their trading volumes, and will be likely to help them win listings from other Gulf states which are looking to part-privatise their commodity assets.
But the Aramco plan has created some public misgivings that Riyadh is relinquishing its crown jewels to foreigners cheaply at a time of low oil prices. Some Aramco employees secretly wish the whole idea would be shelved, sources say.
Apart from choosing an exchange, no decision has been made either on exactly which assets will be floated, or what Aramco's internal organisational structure would look like after listing, the sources say.
One of the main issues being discussed internally is the valuation. Prince Mohammed has said the IPO will value Aramco at a minimum of US$2 trillion (S$2.72 trillion), although some analysts' estimates are between US$1 trillion and US$1.5 trillion.
Though listing on the New York market would mean access to more liquidity, this would bring greater scrutiny to Aramco's estimates of proven energy reserves and future oil prices, as well as its demand forecasts, all of which play a major role in the company's valuation, another industry source said.