British officials tell Financial Times preparations by world's biggest oil company are dragging and listing will not happen this year
Saudi Aramco's plan to part-privatise has been hit by indecision and poor preparation, meaning its listing on a foreign stock exchange could be significantly delayed, according to British officials in contact with Saudi counterparts.
Saudi Arabia wants to sell five percent of Aramco as part of an economic reform programme driven by Mohammed bin Salman, the crown prince, who visited the UK this week. Any extended delay would endanger his push for reforms and tackling the country's $52bn budget deficit.
The kingdom had targeted a late 2018 listing on the country's Tadawul exchange but any simultaneous flotation in a foreign country has been questioned for myriad reasons, according to the Financial Times.
The crown prince's advisers have struggled to achieve the $2 trillion valuation wanted by bin Salman due to the firm's finances and internal operations being kept secret for years, while its ties to the state have raised financial, legal and regulatory challenges.
Indecision in Riyadh about the public listing structure has caused frustration inside the company, according to the FT. Decision-making timelines have slipped and other options for a privatisation have emerged, as the complexities of executing the public offering have become clear - from legal risks to disclosure rules.
London, New York and Hong Kong are among foreign exchanges competing for the sale.
Bin Salman wants to list in New York, according to the FT, and is expected to push US officials to make regulatory concessions for the deal when he visits this month.
However, senior ministers and Aramco executives have favoured London.
Khalid al-Falih, the energy minister, told CNN last week: "I would say litigation and liability are a big concern in the US . . . Saudi Aramco is too big and too important to be subjected to that kind of risk."
Amin Nasser, Aramco's chief executive, told British and Saudi business leaders on Thursday in London that all preparatory work would be completed in the latter half of 2018.
Theresa May, the British prime minister, visited Riyadh last year with Xavier Rolet, the former chief executive of the London Stock Exchange, to aid Britain's attempt to secure Aramco's listing.
That coincided with moves to bend London's rules on the listing of state-owned enterprises - Britain’s Financial Conduct Authority said in July it was planning to create a new category within its "premium" listings, which would exempt state-owned companies such as Aramco from certain rules.
Premium listings are subject to rigorous governance standards.
Under the proposals, a sovereign shareholder would not be treated as a "related party", meaning it would not need prior shareholder approval for a transaction between the government and the company - allowing the Saudi state to conduct business as usual without scrutiny.