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Potential complications delay Saudi Aramco IPO’s final form: The Economist

Saudi Aramco IPO funds to diversify the Kingdom’s economy

Saudi Aramco

The Saudi Aramco IPO is so large, it can only be handled by New York or London stock exchanges, which could lead to potential legal problems.

April 29 (Reuters) – The final form of the Saudi Aramco initial public offering (IPO) is not yet decided due to potential complications in the share sale, the Economist reported on its website, citing Chairman Khalid al-Falih.

Due to the huge size of the issue, it can only be handled by the largest stock markets like New York and London, which could lead to potential legal problems that could have “unintended consequences,” the Economist quoted Falih as saying. (http://econ.st/1WWnF2k)

A listing in New York would raise the possibility of “frivolous lawsuits” against the Saudi kingdom, while a London listing may lead to “awkward questions” about the reach of British authorities into a company’s global revenues and assets, according to Falih.

Saudi Aramco is considering investments in liquefied natural gas and other gas-related projects abroad, Falih said, adding that it also plans to build up domestic businesses in chemicals, power and renewable energy, according to the report.

Though the reserves are constitutionally the property of the kingdom, a concession and an appropriate fiscal regime would enable the company to promise a steady stream of forward income to shareholders, the Economist said, citing Falih.

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The world’s biggest energy company outlined financing plans on Wednesday that will support its expansion into new areas under a sweeping economic reform plan released by Riyadh this week.

Under the reform plan, a stake of less than 5 percent of Aramco is to be offered to the public, as well as stakes in some subsidiaries. An IPO, which will be a complex process given the company’s size and strategic importance, may occur in 2017 or 2018.

(Reporting by Harshith Aranya in Bengaluru; Editing by Gopakumar Warrier)

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