Saudi Tadawul pushes to be sole Aramco IPO venue

Local exchange has enough liquidity to absorb entire share sale, says chief executive

Saudi and Foreign investors standing in front of the Aramco logo during the 10th Global Competitiveness Forum in the capital Riyadh. Fayez Nureldine/AFP

Saudi Arabia's main stock exchange aspires to be the exclusive venue for the listing of Saudi Aramco's initial public offering and the market has sufficient liquidity to absorb the share sale, the exchange's chief executive said on Thursday.

Such a listing would dwarf anything else on the bourse.

Saudi officials have said Aramco plans to list the oil giant's shares on the local bourse and on one or more foreign market in a bid to help raise the kingdom's profile in the eyes of overseas investors, a key part of its goal to reform the economy.

But the Tadawul chief executive Khalid Al Hussan said the local exchange aspired to be the exclusive venue for the listing of the share sale and could absorb all of it.

The Tadawul was working hard to convince Aramco of the merits of such a move, but the company had not yet made a decision, he said.

"Tadawul is the main exchange in the region and as the most liquid among the largest 25 exchanges in the world and among the 10 largest emerging markets, Tadawul aspires to be the exclusive venue," he said at the Future Investment Initiatives conference in Riyadh.

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Saudi Arabia expects to value the state-owned oil producer at a minimum of US$2 trillion, in what could be the world’s biggest IPO, the centrepiece of its Vision 2030 plan to diversify the economy away from oil.

But some analysts have expressed concern about the risk of the share sale swamping the local market.

The market capitalisation of Tadawul is around $340 billion. Saudi Basic Industries (Sabic) the largest company listed to date with a market capitalisation of about $78bn.

"The exclusive listing of Aramco on the Saudi stock exchange is possible but at a speculated valuation of around $2tn it will be too large for Tadawul to solely handle the listing of even a 5 per cent stake sale," said Nitin Garg, a senior analyst at Sico Bahrain. "The Saudi market does not have sufficient liquidity to absorb such a large initial public offering."

Aramco's chief executive said on Tuesday that domestic and international exchanges such as New York, London, Tokyo, and Hong Kong have been looked at for a partial listing of the state oil giant. The company has said it plans to list in 2018.