Saudi prince says Aramco IPO will take place by 2021

A worker stands at a pipeline, watching a flare stack at the Saudi Aramco oil field complex facilities at Shaybah. Photo / Getty Images

Saudi Arabia's crown prince has said Aramco's initial public offering will take place by 2021, and reiterated his view that the state-owned oil company will be valued at US$2 trillion ($3.1t) or more.

Mohammed bin Salman's comments come after a series of delays to what has been billed as the world's biggest IPO.If the plan to sell 5 per cent of the state-owned company goes to plan, it will raise more than US$100 billion for the country's sovereign wealth fund.

"I believe late 2020, early 2021," Prince Mohammed said, speaking to Bloomberg in Riyadh.

"The investor will decide the price on the day. I believe it will be above US$2t. Because it will be huge."

The IPO was first announced as part of Vision 2030, a plan to modernise the country's economy and reduce reliance on oil.

Originally the target date for the IPO was 2018, but earlier this year Saudi Arabia announced the project would be delayed.

Prince Mohammed said the delays originated in mid-2017, when Aramco started talks to buy a majority stake in Riyadh-based chemicals company Sabic, a deal that has been estimated to be worth US$70b.

"Everyone heard about the rumours of Saudi Arabia cancelling the IPO of Aramco, delaying that, and that this is delaying Vision 2030," said Prince Mohammed. "This is not right."

The crown prince said it would have been unfair to go ahead with the listing only to surprise investors soon after with a big deal in chemicals.

US banks JPMorgan Chase and Citigroup are working on the IPO.

Prince Mohammed has now given Saudi Aramco less than three years to complete both the Sabic acquisition and the IPO. He believes the Sabic deal will close next year. Aramco will then need a full financial year before it can go ahead and sell shares to the public, according to the crown prince.

Many analysts say his US$2t valuation is too ambitious and could become a key sticking-point in the share offering, with some saying US$1t is more realistic.

Another problem is the increased scrutiny that would be required as part of a public listing.

Both London and New York are vying to be the venue for the listing.

In June this year the London Stock Exchange created a new category to make it easier for Aramco to comply with requirements.