As Wall Street's top bankers descend on Riyadh this week for Saudi Arabia's annual investment conference, dubbed "Davos in the desert", some Saudi Aramco executives will be back in the US, trying to convince a new set of investors to back the initial public offering of the state oil company.
Despite the company's chairman saying this month the listing of Saudi Aramco is happening "very, very soon", the process hit a roadblock days later with the kingdom having to postpone the official launch of the stock market flotation.
Riyadh has since increased the pressure on advisers and executives to get the IPO over the line this year and Saudi Aramco is now making renewed efforts to present the best version of itself to investors, to restore some momentum.
The listing has been dogged by delays for years, amid persistent doubts over whether the company — the world's most profitable by net income — can achieve the lofty valuation expectations of Crown Prince Mohammed bin Salman.
Prince Mohammed, who first disclosed his ambitions for an IPO of Saudi Aramco three years ago, as part of a broad push to overhaul the kingdom's economy, has been adamant the company is worth at least US$2 trillion ($3.1t).
But some foreign investors that Saudi Aramco has sought out believe it is worth no more than US$1.2t, two people familiar with the matter have said. That big gap in valuation expectations has fed uncertainty over whether the kingdom will proceed with the long-awaited listing.
Steffen Hertog, a political scientist at the London School of Economics, said that domestic investors could probably provide enough support to achieve that US$2t valuation. But to get big foreign investors on board, "which is what they really want", Riyadh may have to compromise on pricing.
"The market is very unforgiving," said a person close to Saudi Aramco.
Saudi officials had initially sought a listing in Riyadh in November. Now Saudi Aramco says the timing of the deal "will depend on market conditions and [will] be at a time of the shareholders' choosing".
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The IPO was delayed last year partly because of an inability to achieve the US$2t sought after by Prince Mohammed. The kingdom then revived plans in recent months in the wake of a successful debut bond issue.
Prince Mohammed is keen to secure blockbuster demand for the offering to fill state coffers — raising up to US$60 billion by listing up to 3 per cent of the company on the kingdom's Tadawul exchange, while hoping to also reap political reward through a successful retail offering.
Even as Prince Mohammed's social reforms such as allowing women to drive have been a success among Saudi youth, he has failed to deliver economic successes as growth has been stagnant and unemployment has increased.
"MBS needs a win — he needs to show the Saudis that his reforms will make them rich," said a banker close to the IPO process.
But the Tadawul is cautious too. This month officials warned the government and advisers on the IPO that should they insist on a markedly high valuation, the stock price could decline after the listing.
Any fall would destabilise the entire index, which only this year secured emerging markets status on global indices, and would also leave Saudi retail investors facing losses on their investments.
Local bankers have pointed to enthusiasm among Saudi investors. The kingdom's banks are expected to lend heavily to local investors for their share purchases. Meanwhile, wealthy merchant families — some of whom were ensnared in a corruption crackdown two years ago — are being pressured to invest.
The kingdom has also approached sovereign wealth funds in the Middle East and other state investment vehicles.
But people familiar with the IPO process say some foreign institutions, particularly in the US, have expressed reservations about state interference in Saudi Aramco's corporate strategy. They are also anxious about the kingdom's ability to protect energy assets in the wake of the September drone and missile attacks on Saudi Aramco infrastructure.
Another factor putting Riyadh on the back foot: the aggressive schedule for the revived IPO which has not allowed much time to sound out foreign investors and prepare company executives for presentations about the investment case.
Some institutions were dissatisfied with how Saudi Aramco executives explained the company's limited to no role in production policy, reserves management and relations with Opec — all of which are matters dictated by the Saudi government.
People close to Saudi Aramco lay a big part of the blame for the company's current predicament with the advisers and bankers working on the IPO who have failed to adequately challenge Prince Mohammed's unrealistic assumptions.
Moelis & Co and Lazard have been appointed independent financial advisers with Michael Klein, the former Citigroup banker, also working on the deal. Goldman Sachs, Citigroup and Bank of America Merrill Lynch are among those that have joined JPMorgan Chase and Morgan Stanley as global co-ordinators.
To get a role on the listing many of them made optimistic assumptions so they could reinforce the case for a US$2t valuation, according to people familiar with deliberations. "We were pitching to get the work, what do you expect?" said a banker on the deal.
Written by: Anjli Raval and Simeon Kerr
© Financial Times