Only confirmed component of Aramco listing is an offering on the domestic Tadawul exchange

Saudi Arabia’s finance minister has confirmed the kingdom is exploring a private stake sale in state energy giant Saudi Aramco, with plans for an international listing just one option for a privatisation billed as the largest initial public offering in history.

Mohammed Al-Jadaan said in an interview with the Financial Times on Thursday that while plans for listing Aramco internationally were still being debated at the highest levels of the kingdom, the only confirmed component was an offering on the domestic Tadawul exchange. Private stake sales to strategic investors are also being considered.

The kingdom is aiming to finalise plans for the IPO’s full structure by the end of this year, Mr Al-Jadaan said. Bankers, lawyers and consultants waiting for news on the offering that is expected to generate record fees, with the kingdom valuing the total company at more than $2tn.

“We agreed and we have said publicly that Tadawul is for certain,” Mr Al-Jadaan said. “[But] are we going to go with an international market? If we go, where are we going? And if we go, are we going public or we are going private.”

The Financial Times first reported this month that Saudi Arabia was considering shelving the international leg of the IPO in favour of a private stake sale to strategic investors, alongside a domestic listing on the Tadawul. The international listing could be delayed, according to people familiar with the IPO preparations, with one suggesting it could be abandoned entirely.

Mr Al-Jadaan, one of the kingdom’s leading officials on the IPO project, said no “option” had yet been ruled out as the kingdom needed to complete “proper due diligence”.

The New York Stock Exchange and London Stock Exchange have been vying to win the international leg of the IPO, with Hong Kong and Tokyo also pushing to be part of any listing. Mr Jadaan said all of these exchanges were being considered.

Mr Al-Jadaan is the first official to confirm consideration of a private placement.

He said one option would include a Tadawul domestic listing plus private sales to international investors. In doing so Aramco could observe the US Securities and Exchange Commission’s “Regulation S”, he said, which would exclude US investors from the offering.

“You do Tadawul and then you go around the world to certain countries and say to investors: ‘Here is the story come and invest’,” said Mr Al-Jadaan, speaking on the sidelines of a conference in the Saudi capital.

“There is a lot of work now for the decision makers,” he said. “We need to make sure we do not leave any stone unturned. This is a very, very significant transaction.”

The listing is the centrepiece of an economic reform programme being driven by Mohammed bin Salman, the kingdom’s powerful Crown Prince. Plans to list a 5 per cent stake could raise in excess of $100bn if the kingdom’s $2tn valuation is reached.

That would dwarf the $25bn raised by China’s Alibaba in 2014, the previous biggest IPO in history.

Bankers and analysts have said the valuation Saudi Aramco may reach on an international exchange could be far lower, however, which may make a private stake sale more attractive.

Chinese investors, as well as other sovereign and institutional buyers, have expressed interest in acquiring shares in the state energy giant, according to other Saudi officials.

The finance minister maintained the IPO remains on track for 2018 but, like other officials, stopped short of confirming a final decision on an overseas listing.

He said there would be “plenty” of time to list internationally should it wish to next year.

The head of Saudi Arabia’s Tadawul told the Financial Times on Wednesday he was pushing to be the “exclusive” venue for the IPO. His first remarks on the listing have raised further questions about the future of the international component.

Any final decision will ultimately lie with Prince Mohammed, who is in charge of the country’s oil and economic affairs.

IPO proceeds would be invested into non-oil sectors as part of his Vision 2030 agenda, which seeks to diversify the kingdom’s economy.

Additional reporting by David Sheppard and Arash Massoudi in London

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