SAUDI FIRST

The world’s biggest IPO might be limited to its 25th-largest stock exchange

For the past two years, there’s has been a behind-the-scenes battle rumbling between New York, London, and Hong Kong to secure the public listing of Saudi Aramco, the world’s largest oil company. In what promises to be a blockbuster IPO, the company would fetch a valuation as high as $2 trillion. (Apple, which is currently the world’s largest listed company, has a market cap of around $840 billion.) In addition to the prestige that would come from listing the world’s largest public company, Aramco’s IPO would generate a gusher of fees for banks, advisers, and one lucky exchange operator.

New York is generally considered the front-runner, and Saudi Crown Prince Mohammed bin Salman will be in the city next week, meeting bank bosses and other important financial figures. He was in Washington earlier this week for a sit-down with Donald Trump, who last year made a personal public appeal for Aramco to hold its IPO in New York.

Aramco’s plan had been to list on the Saudi stock exchange, known as the Tadawul, alongside a larger international listing. But challenges around the unprecedented disclosures that would be required of the state-controlled company’s finances and investor unease with the hefty valuation being pitched have delayed the process. Now, rising oil prices are another factor causing the Saudis to reconsider the capital-raising plan. The Wall Street Journal reported this week (paywall) that officials will go ahead with a listing solely on the Tadawul, and then decide if issuing shares on an international venue is worth it at all.

Saudi Aramco’s purported market capitalization is more than four times all of the stocks on Saudi Arabia’s stock market, which currently add up to $466 billion. By comparison, the London stock exchange has a total market cap of $4.4 trillion, while firms listed on the New York Stock Exchange are worth a combined $23 trillion.

Saudi officials say that a domestic listing would boost the local market and let ordinary Saudis buy shares. Meanwhile, a Tadawul-only listing would block out many international investors, because the Saudi exchange isn’t yet included in major benchmark indexes. It could also strain the domestic market, which would have to deal with the surge of activity and interest that comes when the world’s largest listed company issues shares on its 25th-largest exchange.

home our picks popular latest obsessions search