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Saudi Aramco IPO

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 06 Aug 2018, 15:20:32

That isn't true. There was no mention of a 2018 target date for the IPO in their initial announcements. Even the statement by the CEO of ARAMCO in early 2018 doesn't set a late 2018 IPO da


From Financial Post Article in Oct 6, 2016

Saudi Arabia, under pressure from lower crude prices, wants to sell shares in Aramco in early 2018 as part of an effort to generate revenue and reform its economy. The government hopes to raise about $100 billion from the IPO of its flagship asset. The planned sale, which Deputy Crown Prince Mohammed bin Salman announced in April, could be the world’s largest share offering.


From Forbes on Feb 25th, 2017

Initially, the IPO was expected to take place in early 2018, but the expected date has since been pushed off to late 2018 or early 2019


The CEO of ARAMCO also said he doesn't plan on doing the IPO in NY, London or Hong Kong as you falsely claim. The CEO said they will list in KSA. Of course, disclosure requirements will be minimal if the IPO comes out only in a KSA bourse.


He did not say he doesn't plan on doing the IPO in NY, London or Hong Kong...he mentioned they will list on the Saudi bourse but it is almost certainly not large enough to offer out 5% of ARAMCO.

In January of this year in a Financial Post article:

Saudi Arabia has shortlisted New York, London and Hong Kong — singly or in a combination of two or even all three — for the international portion of the listing of national oil company Aramco, two sources with knowledge of the discussions said.

The initial public offering (IPO) will also include the Saudi stock exchange, Tadawul, and is still set for late 2018, the sources said.

The shortlist means Tokyo, Singapore and Toronto are no longer in the running for what is likely to be the world’s biggest IPO


And finally, the news story predates the Crown Prince influencing ARAMCO to sell bonds and buy the states shares of SABIC for ca. 50-60 billion, thereby providing the money the Crown Prince wants for infrastructure projects and obviating any need for ARAMCO to do an IPO to raise money for KSA infrastructure projects---.

Thus it makes sense when recent news reports in the WSJ and elsewhere (see my links and cogent discussion up the thread) say the IPO is stalled out and may not happen at all now.


as usual, your arguments are all over the place. The whole point is that your claim the IPO is being avoided because SA is worried about disclosure is completely stupid when you take into account that the issuance of bonds on the international market will demand the same level of disclosure as the IPO.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Mon 06 Aug 2018, 16:01:13

...completely stupid ..


It appears you are the one who is completely stupid, as well as being exceptionally rude. OK, lets bring the discussion down to your stupid and rude level....

You're the one claiming the news report from Oct 2016 was the "initial" announcement when the IPO was first announced in January 2016. I guess you're too stupid to know the difference January and October.

Similarly, you are the one claiming the IPO is set for late 2018, when the ARAMCO announcements say no such thing. In fact the latest public statement by an ARAMCO insider just a week ago said it will slip into 2019 and maybe later, while off the record ARAMCO insiders are saying the IPO may not happen at all. I guess you're too stupid to know the difference between 2018 and 2019 and subsequent years.

AND, you are the one claiming the IPO will be listed in New York, London, and/or Hong Kong when there is no scheduled listing in any of those places, and the ARAMCO CEO in his most recent statement talked about bringing it out in KSA. I guess you're too stupid to know the difference between the tiny Saudi Arabian bourse and the major bourses in New York, London, etc.

Finally, you clearly don't have the necessary wit to understand that the situation has changed since ARAMCO decided to go into the bond market to raise billions instead of doing an IPO to raise billions.

Its a pretty simple concept, i.e. the bond issue represents an alternative way for ARAMCO to raise money. Why can't you understand that? Oh, thats right. You are too stupid to understand simple ideas like that.

aramco-is-said-to-weigh-global-bond-sale

I quote from the link above--an article in Bloomberg:

Bond issue could signal shift from planned IPO for oil giant

Saudi Aramco is weighing tapping the international bond market for the first time to finance the acquisition of petrochemical giant Sabic, a move into global capital markets that could offer an alternative to an initial public offering, according to people familiar with the talks.

The Aramco-Sabic deal could give Saudi Crown Prince Mohammed bin Salman a shrewd way to avoid an IPO

Do you get it now?

And there's more. You just claimed the bond sale would require identical full disclosure---just like an IPO. But as usual---your claim isn't true.

An IPO would indeed require total disclosure so that IPO buyers could evaluate the value of ARAMCO and the value of the IPO. The Bond would not require full disclosure of the value of ARAMCO. And that is a very important distinction.

Again, I quote from the Bloomberg article in my link above:

Raising cash from bondholders solves another problem: Aramco’s valuation. MBS, as the 32-year-old crown prince is known, said the company would be worth at least $2 trillion -- more than double the current market valuation of Apple Inc. -- and perhaps as much as $2.5 trillion. Yet most analysts and investors have said that $1 trillion to $1.5 trillion was more realistic. A bond won’t put a value on the company.

Do you get it now? For the second time in one post, for heaven's sake DO YOU GET IT NOW?

Sheesh!!!! :roll:

Cheers!
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 06 Aug 2018, 16:44:37

You're the one claiming the news report from Oct 2016 was the "initial" announcement when the IPO was first announced in January 2016. I guess you're too stupid to know the difference January and October


I did not say that did I? Again showing your poor reading skills

What I posted was a quote from a Financial Post article in Oct 2016 that states SA wants to sell shares in ARAMCO in early 2018 and that the planned sale was announced in April by MBS. What that means is that from a few months past the original announcement 2018 was the target….it has been delayed once in early 2018 so it is hardly something that has stalled continually. As well in January of 2018 the gov't changed the status of ARAMCO to a joint-stock company, something they would never have done if they weren't going to list it.

Similarly, you are the one claiming the IPO is set for late 2018, when the ARAMCO announcements say no such thing.


Are you that dense? Did you not read anything I’ve posted above in this very repetitive thread? I acknowledged that the CEO of ARAMCO stated officially in an interview in June that the IPO would be delayed (not cancelled, not put on hold) and that the actual timing was the decision to be made by MBS but hopefully in 2019.

AND, you are the one claiming the IPO will be listed in New York, London, and/or Hong Kong when there is no scheduled listing in any of those places, and the ARAMCO CEO in his most recent statement talked about bringing it out in KSA. I guess you're too stupid to know the difference between the tiny Saudi Arabian bourse and the major bourses in New York, London, etc.


Again the quote I gave was from an article in FP in January of this year where it states that NY, London and Hong Kong have been shortlisted and that the IPO would include the Tadawul. Of course, there is no scheduled listing in any of these places, duh. That "schedule" would not be announced until they had finished all the filings and had approvals from the relevant exchanges, at which point the perspectus is released. Do you not read anything posted here or are you just illiterate?

Finally, you clearly don't have the necessary wit to understand that the situation has changed since ARAMCO decided to go into the bond market to raise billions instead of doing an IPO to raise billions.


Where did anyone from the ministry or ARAMCO state that they were doing the deal with SABIC in order to cancel the IPO? Quite simply it was never said. It is speculation in the press and nothing more. Which I have said about 3 or 4 times in this very repetitive thread. Again when you have someone from the ministry or ARAMCO stating ...."we no longer will be doing an IPO as the SABIC deal will solve all the issues" get back to us.

Do you get it now? For the second time in one post, for heaven's sake DO YOU GET IT NOW?


Why are you continually trying to spin the argument from one thing to another? What I said, for one last time, is that contrary to your continual claim that SA wants to avoid disclosure and hence has put an IPO on hold for that reason …..the issuance of bonds on the international market demands the same disclosure. So if they were canceling the IPO because of disclosure worries (which you have claimed several times) why would they be pursuing a bond that requires similar disclosure? What part of that very simple statement do you not understand?

As to buying SABIC removing the need for an IPO, a cash grab was not the only reason MBS was pushing the idea of sale of a portion of ARAMCO. He wants to bring SA into the modern world and by increasing the size of the Tadawul and listing ARAMCO locally and internationally he helps accomplishes that goal. He sees ARAMCO as the being the largest international integrated oil and gas company...that can't happen if it isn't listed at some point.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Mon 06 Aug 2018, 17:33:04

dense...


Speaking of denseness, I notice you didn't respond to my point about the IPO requiring full disclosure by ARAMCO while a bond doesn't have the same requirements. The article in Bloomberg I linked to was pretty clear on this, wasn't it?

Did you intentionally ignore this point because your claim that they both require identical disclosure on Aramco's part is so clearly wrong, or were you too dense to understand the point itself?

Cheers! :lol:
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 06 Aug 2018, 17:53:18

Speaking of denseness, I notice you didn't respond to my point about the IPO requiring full disclosure by ARAMCO while a bond doesn't have the same requirements. The article in Bloomberg I linked to was pretty clear on this, wasn't it?


UH....I think you are mistaken. I also think you don't understand what disclosure entails.

https://www.bloomberg.com/news/articles/2018-07-26/aramco-is-said-to-weigh-global-bond-sale-to-finance-sabic-deal

If Aramco goes ahead with an international bond -- potentially among the biggest ever done by a corporate issuer -- the sale would force the world’s largest oil producer to disclose its accounts to investors for the first time since nationalization four decades ago as well as many other details about oil reserves and operations.


The only thing they would avoid is having to do a valuation which is part and parcel of an IPO. A bond doesn't put a "market value" on the company but it does entail doing all the same disclosure necessary once the prospectus is issued.

so get your facts straight.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Mon 06 Aug 2018, 21:17:29

Speaking of denseness, I notice you didn't respond to my point about the IPO requiring full disclosure by ARAMCO while a bond doesn't have the same requirements. The article in Bloomberg I linked to was pretty clear on this, wasn't it?


The only thing they would avoid is having to do a valuation which is part and parcel of an IPO....
so get your facts straight.


I suggest your get your facts straight. You just admitted in your post that the Bond will have different disclosure requirements then an IPO which is exactly what I said in my post.

So...if we both agree now that there is is no need when issuing a bond to do a full public disclosure of financial and oil reserve information as ARAMCO would have to do if it went ahead with the IPO, then lets consider what actually is required when issuing a bond.

1. An IPO offering would require full public disclosure of financials and information on oil reserves so investors can look at all the numbers and make their own estimates of the value of ARAMCO.

2. BUT a Bond offering doesn't have the same requirements at all---ARAMCO will simply have to show credit rating agencies that it is "credit worthy." In this process ARAMCO's financial and oil reserve information is not disclosed and is not made public. Instead, one or more rating agencies will examine ARAMCO's books and then It will be up to the credit rating agency to give the Bond a rating.

3. Then the proposed Bonds will go on sale in the market. Investors will NEVER see all of ARAMCO's financials and oil reserve info as they would in an IPO. This data will never be made public.

4. That means an ARAMCO Bond would go through a totally different process with different standards then ARAMCO would face in issuing an IPO, where a full public disclosure would have to be made.

Do you get get it now? :lol: :P :roll: :!:

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 06 Aug 2018, 22:41:49

I suggest your get your facts straight. You just admitted in your post that the Bond will have different disclosure requirements then an IPO which is exactly what I said in my post.


wrong, wrong, wrong. The disclosure for reserves and finances is the same and that is all that is actually "disclosed" at this point in an IPO or a bond offering. Valuation is not disclosure, if you think it is then you should stay away from the stock market. In the case of an IPO the valuation is determined in conjunction with the book-runner or lead investment bank and that is based on an assessment of the reserves valuation and financials along with what they believe the market will bear, it isn't "disclosed" it is calculated. There is no formal need in a bond offering to do a formal valuation (which again is not a part of disclosure) but they will be scrutinized with regards to corporate financials and reserves. So the disclosure part is exactly the same which you would understand if you actually read something here. And what the author of the Bloomberg article hasn't figured out is that with the disclosure required for a bond (reserves and financials) anyone with a modicum of knowledge can actually replicate the NPV of the corporation, it is quite simple to do so. So, in fact, the bond puts out everything in front of Investors (either subscribers to the IPO or the bond issue) that the IPO would other than a market deciding on what the price of a stock should be (and once again in case you missed it there is nothing to do with valuation that is considered a part of disclosure).

So...if we both agree now that there is is no need when issuing a bond to do a full public disclosure of financial and oil reserve information as ARAMCO would have to do if it went ahead with the IPO, then lets consider what actually is required when issuing a bond.


Ok one more time this is what the Bloomberg article states:

If Aramco goes ahead with an international bond -- potentially among the biggest ever done by a corporate issuer -- the sale would force the world’s largest oil producer to disclose its accounts to investors for the first time since nationalization four decades ago as well as many other details about oil reserves and operations.


Do you actually have a clue what you are reading?

2. BUT a Bond offering doesn't have the same requirements at all---ARAMCO will simply have to show credit rating agencies that it is "credit worthy." In this process ARAMCO's financial and oil reserve information is not disclosed and is not made public. Instead, one or more rating agencies will examine ARAMCO's books and then It will be up to the credit rating agency to give the Bond a rating.


horseshit....all of the financial records and reserve information and other information regarding operations becomes available to the rating agency and anyone who takes a piece of the bond.

. That means an ARAMCO Bond would go through a totally different process with different standards then ARAMCO would face in issuing an IPO, where a full public disclosure would have to be made.


no, no and once again no. As the Bloomberg article points out issuing the bond puts all of the reserve and financial information out there. Depending on where the bond is offered this information will be available to bankers and will certainly be "out there" in short order. As well a corporate bond unlike a government bond (ARAMCO is not considered a "gov't" ) is also subject to rules around "continuous disclosure". For all intents and purposes, this means ARAMCO would be treated exactly as they would be if their shares were publicly listed. They are required to continually report on material changes to their business. This is precisely what happened to the Korean National Oil Company when they acquired a Canadian company and chose to finance that through bonds. They were surprised to find out that they were subject to the same stringent rules as a publicly traded company.

lets review what the Bloomberg article said once again given it seems you can't read.

If Aramco goes ahead with an international bond -- potentially among the biggest ever done by a corporate issuer -- the sale would force the world’s largest oil producer to disclose its accounts to investors for the first time since nationalization four decades ago as well as many other details about oil reserves and operations.


Where ever you are getting your information from ....it is wildly wrong.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Mon 06 Aug 2018, 23:07:42

The disclosure for reserves and finances is the same and that is all that is actually "disclosed" at this point in an IPO or a bond offering.


When have you ever seen an oil company's books and data on oil reserves opened to the public as part of a Bond offering?

The credit rating agencies get to look through the books and evaluate the company's finances, yes, and on that basis they rate the bond quality.

But the banks and the public who purchase the bonds....no. They don't get to see the company's financial or asset data when a company issues a Bond. They have to go by the rating given to the Bond by the bond agencies. They don't get to independently see the reserves data and financials themselves.

Cheers!
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Re: Saudi Aramco IPO

Unread postby ROCKMAN » Tue 07 Aug 2018, 10:05:54

Doc - " Each of those investment banks would have a piece of the IPO to sell." Great description of how the brokerage companies control the game initially. I suspect few understood how the initial offering price and timing is determined.

I was too tired to finish my story. LOL.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 07 Aug 2018, 11:38:00

When have you ever seen an oil company's books and data on oil reserves opened to the public as part of a Bond offering?


If it is a corporate bond and not a private placement in most exchanges the requirement is that full disclosure must be made to the regulatory body and to all participants in the bond offering (this is essentially the same as the prospectus for an initial public offering and includes secondary trade to individuals). So if you are an individual buying that bond you recieve the long form prospectus (ARAMCO would have to do a long form prospectus since they are not public traded and not a common issuer of bonds). As an example, if they were issuing bonds in the US the SEC requires submission of 3 years of financial data (audited under GAAP or IFRS provisions) and information regarding all the assets, which in the case of an oil and gas company includes reserves. And if it is not a private placement then the corporation is subject to rules requiring "continuous disclosure" which means they are required to submit quarterly reports to the SEC and also press release on any material changes. Anyone can access the SEC information, so in essence, that information becomes public. But even if they went the route of private placement (which would be nearly impossible to do given the size of the bond required) that disclosure information gets out to those involved in the private placement....in essence more and more people aware of the information which would be impossible to keep secret. Where you seem to be confused is the difference between a corporate bond issued by a reporting issuer (someone who already is listed) versus a corporate bond issued by a non-reporting issuer. In the case of a reporting issuer, all of the information has already been disclosed and that corporation is under obligations of "continuous disclosure" so they do not have additional requirements for disclosure. This exemption does not apply to non-reporting issuers which, currently, ARAMCO would be.

But the banks and the public who purchase the bonds....no. They don't get to see the company's financial or asset data when a company issues a Bond. They have to go by the rating given to the Bond by the bond agencies. They don't get to independently see the reserves data and financials themselv


I suggest you do a bit of learning as to how private companies can issue corporate bonds, how that works and what is required. What was stated in the Bloomberg article and what I have stated are exactly correct. Simply repeating your ill-informed viewpoint about how securities are exchanged is not helpful.

As I said, the only possible way that ARAMCO could issue a corporate bond and avoid broad-based disclosure rules is if they did the whole thing through private placement. This would have to be done solely to "accredited investors" (i.e. investment banks) who would have no rights for secondary trade. Although there is no formal size limits on private placement there is no way in the world they could do something this size without a very, very large syndicate. In that case you suddenly have all the financial and reserve information available to a large number of banks...try keeping that secret for any length of time. The size of private placements tend to be self-restricting given investment banks want the right for secondary trade as it is how they can make money immediately on the bond, they do not generally like to hold onto bonds until the maturity date.
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Re: Saudi Aramco IPO

Unread postby asg70 » Tue 07 Aug 2018, 13:14:11

Not sure where to put this but Saudi Arabia is now heavily investing in Tesla.

https://www.cnbc.com/2018/08/07/tesla-s ... as-2-.html

I'm sure some will use this report to claim that it's proof that the Ghawar is post-peak, but it's definitely an inflection-point.
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Re: Saudi Aramco IPO

Unread postby Cog » Tue 07 Aug 2018, 16:47:59

Its a smart play for the Saudi's either way. They reap incredible gains if EV becomes a thing and they continue to sell oil if its not.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 07 Aug 2018, 17:32:54

what I mentioned on another thread is that Tesla had trading halted today because there were rumors it would be privatized at $420/share. Likely when the Saudis bought their shares it was around $360 or so which means they will have made a $100 MM+ profit in a short time.
I'm sure why they invested was simply in line with the plan of diversifying the PIF holdings out of the oil and gas business.
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Re: Saudi Aramco IPO

Unread postby Cog » Tue 07 Aug 2018, 17:43:25

And with a little advanced notice, those same Saudi's can sell those shares and then short the stock before the deal falls through and reap millions in profits the other way.

Musk better really have backers to take Tesla private or the SEC is going to burn his ass. Clear violation of SEC rules if he doesn't.
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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Wed 22 Aug 2018, 12:10:40

Saudi Arabia reportedly calls off Aramco IPO and disbands advisers

Saudi Arabia has scrapped its plans to list shares of its state-owned energy giant Aramco on stock exchanges, Reuters reports.

The initial public offering was poised to be the largest ever and was at the center of Crown Prince Mohammad bin Salman's ambitious plan to overhaul the Saudi economy.

The kingdom will no longer seek to publicly list shares on its domestic stock market, the Tadawul, or on foreign exchanges, several sources told Reuters.

https://www.cnbc.com/2018/08/22/saudi-a ... ports.html

So signs KSA is running out of oil, as I'm sure the Cassandras will claim? Or is the KSA hedging its bets both ways. Keeping their oil as global demand grows apace, even while they diversify financial assets away from oil in venues like Tesla? (That's my bet). Or something else entirely?

One thing I think this tends to mean -- less free cash to invest a ton of money in a high risk venture of funding taking Tesla private.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Wed 22 Aug 2018, 13:11:25

Keeping their oil as global demand grows apace, even while they diversify financial assets away from oil in venues like Tesla? (That's my bet). Or something else entirely?


The thing of it is SA was always going to "keep their oil", there was never any intent through an IPO to give anyone else ownership of the oil, all they would have is share ownership in Aramco which has a right to lift oil and sell it. The share holders don't actually get any of the money from the sale of oil and gas, what they get is any uplift value on the share price due to strong cashflow from sales.

Obviously need to see what the formal statement is. Too much of this discussion has been about some "official from the industry" saying such and such with little to no official statements.

the statements in the Reuters report suggest it isn't a "done deal", perhaps something not to be pursued now but maybe at another time.

“The advisors have been put on standby,” a third source, a senior oil industry official said.

“The IPO has not been officially called off, but the likelihood of it not happening at all is greater than it being on.”
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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Wed 22 Aug 2018, 13:30:37

rockdoc123 wrote:
Keeping their oil as global demand grows apace, even while they diversify financial assets away from oil in venues like Tesla? (That's my bet). Or something else entirely?


The thing of it is SA was always going to "keep their oil", there was never any intent through an IPO to give anyone else ownership of the oil, all they would have is share ownership in Aramco which has a right to lift oil and sell it. The share holders don't actually get any of the money from the sale of oil and gas, what they get is any uplift value on the share price due to strong cashflow from sales.

My bad on using loose language. I didn't mean to say/imply that the IPO meant they'd be giving up any of their oil per se, but that they'd be giving up some of the INCOME (and potential profits) from that oil.

And yes, I realize that this isn't a done deal, re the cancellation. However, I view Reuters as one of the less obviously biased MSM sources, and they cited multiple sources, so this sounded like a meaningful (though not definitive) development -- or I wouldn't have posted about it.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Saudi Aramco IPO

Unread postby mmasters » Wed 22 Aug 2018, 13:42:20

I think it was all about needing the appropriate funding. When oil was low they were struggling financially so they came up with this as a way to get money in advance. Now that the price of oil is trending higher they're better off and feel they don't need to go down this path.
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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Wed 22 Aug 2018, 13:56:39

pstarr wrote:Told you so. I was right . . . you were wrong.


I was right about the Cassandras, as you show.

Who is the "you" you're accusing of being wrong, and what, specifically, are you talking about?
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Wed 22 Aug 2018, 13:59:16

pstarr wrote:All this fancilful conjecture and amateur punditry does not explain SA's flailing and confusion. Not unlike the death throes of a wounded animal. Curious and sad

Naturally, Cassandras view anything short of Nirvana as "death throes". Unfortunately, with a track record of thousands of bad calls spanning many years, and VERY FEW correct calls (despite vague self-congratulating claims with little or no substance), such claims lack ANY meaningful credibility.

But do carry on. We all need hobbies and delusions of success.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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