Tokyo stock exchange "courting" Aramco for the international IPO

05 oct. 2019 English Section
Tokyo stock exchange "courting" Aramco for the international IPO

Tokyo Stock Exchange wants to persuade Saudi oil giant Aramco to list its shares on this market as part of its international component of its future IPO.

According to Arab News, Hidetoshi Nagata, the head of global listings of the TSE has said that already some meetings have taken place between the Nippon officials and the executives of Aramco in charge of the IPO, and several other meetings are going to be arranged.

"We have had meetings with the officials of the company several times, and we are now approaching Aramco again to set the next meeting", said Nagata, who added that Aramco CEO, Amin Nasser, met with the officials of the TSE in the past, not recently.

Aramco officials have declined to make any comment concerning the information published by Arab News.

Nagata says: "The listing on an Asian market would have been an advantage for the Saudi oil company, because the price of Aramco shares would be influenced by the price of oil. A listing in Tokyo would mean that the company can get a fair price throughout all the oil trading, which take place 24 hours a day".

About 40% of the gross oil imports of Japan come from Aramco, and manufactured goods, especially household appliances and vehicles, are important elements of Saudi Arabia's import elements.

The plans for the listing of Aramco is accelerating, the investment banks engaged in that process are holding an increasing number of meetings, to sell at least 1% of the company. The 1% share is valued at 20 billion dollars at most.

Aramco plans to take public 1% of state owned group on the Riad stock exchange by the end of 2019 and 1% in 2020. Saudi authorities intend to take 5% of the company public of Aramco until 2021. According to the authorities, this listing is the central plan of the government of Saudi Arabia to transform the economy by attracting foreign investments and diversification.

Aramco has oil reserves of approximately 265 billion barrels, representing 15% of the world's oil deposits. The listing of 5% of the company could generate 100 billion dollars, based on the valuation of Aramco at 2,000 billion dollars, but some analysts think that the final price would be much lower.

After the listing on the Saudi market, Aramco plans to also get listed on a major foreign market, but it hasn't picked one yet. The officials of the Nippon exchange feel like the company would first need to get listed locally, and then it may be joined by the TSE. "If the company is already listed, then there won't be minimum requirements to meet, so the listing of Aramco in Japan won't be a problem", said Hidetoshi Nagata.

Tokyo is the third largest stock market in the world, after those of the US: NYSE and Nasdaq. Created in 1878, the Tokyo exchange merged with the Osaka exchange in 2013, creating the Japan Exchange Group.

Last year, Aramco was the biggest oil company in the world, surpassing Abu Dhabi National Oil Company (ADNOC), Royal Dutch Shell, Total and BP, according to ratings firm Fitch.

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