Page 8 - AsianOil Week 45

AsianOil EAST ASIA AsianOil
JXTG expresses scepticism over Aramco IPO
The head of Japan’s largest refiner has questioned the attractiveness of the Saudi oil giant’s forthcoming listing
COMMENTARY
WHAT:
JXTG president Tsutomu Sugimori has said Aramco needs to show greater corporate transparency.
WHY:
Aramco’s reserve levels are unclear, as are its contracts with the Saudi royal family.
WHAT NEXT:
Japanese investors
may avoid the IPO unless the producer can demonstrate change.
JAPAN’S largest refiner has cast some seri- ous doubt over whether Saudi Aramco’s long- awaited initial public offering (IPO) will able to attract Japanese investment.
Speaking at the company’s earnings briefing in Tokyo on November 8, JXTG president Tsu- tomu Sugimori said there were several question marks over Aramco’s reserve levels as well as cor- porate transparency that could make investing in the world’s largest oil producer a tough sell to shareholders.
At the same time, however, the executive also revealed that his company was planning to reduce its term crude imports from the Middle East as a whole, citing both security concerns and the need for greater feedstock flexibility as motivating factors.
His comments came just days before Ara- mco published its IPO prospectus on the Tad- awul stock exchange in Riyadh on November 10. The document, despite being over 600 pages in length, failed to include valuation details. The prospectus did, however, offer valuable insight into Aramco’s operations and the risks inherent with an investment in the company.
IPO prospectus
Aramco admitted some vulnerability, listing no fewer than 17 risks relating to the compa- ny’s operations, including: supply and demand,
political and economic issues in Asia, compe- tition, reserves estimations and growth. Also mentioned as possible disruption factors were the government’s control over oil production and potential future terrorist attacks.
The company did give some specifics relat- ing to the IPO. The institutional book-building period will run from November 17 until Decem- ber 4, with the retail investor book-building period finishing a few days earlier, on Novem- ber 28.
It said that 0.5% of the company would be allocable to individual investors, adding that non-resident, non-Saudi nationals would be able to acquire shares via swap deals with peo- ple authorised by the Capital Market Authority (CMA), the Saudi central bank. Private investors buying shares who hold them for a period of six months after trading begins will receive bonus shares up to a total of 100 shares.
The government of Saudi Arabia under- took to impose a temporary moratorium on the sale of additional shares to the public for a six-month period after trading begins. How- ever, this ban does not apply to sale of equity stakes to state-owned sovereign wealth funds or strategic investors.
Aramco also committed not to engage in share dilutions during the first six months of trading.
P8
w w w . N E W S B A S E . c o m Week 45 13•November•2019