Confident Al-Falih holds out hope for early Saudi Aramco IPO

Khalid Al-Falih: ‘When the Aramco-SABIC acquisition is consummated it will not only be the largest oil company and gas company, it will be a very large company in refining and petro-chemicals.’ (AFP)
Updated 25 April 2019

Confident Al-Falih holds out hope for early Saudi Aramco IPO

  • Speaking at the Financial Sector Conference in Riyadh, Al-Falih said that preparations for a listing of Aramco shares — an initial public offering (IPO) — could happen ‘sooner than you think’
  • The listing has been slated for 2021 according to government and company announcements, but Al-Falih’s comments raise the possibility that it could be brought forward to next year

RIYADH: Khalid Al-Falih, the Kingdom’s energy minister and chairman of Saudi Aramco, held out the tantalizing prospect that the giant oil company’s long-planned stock market listing could happen ahead of the previously announced schedule.
Speaking at the Financial Sector Conference in Riyadh, Al-Falih said that preparations for a listing of Aramco shares — an initial public offering (IPO) — could happen “sooner than you think” and that a prospectus for the listing could come “in the not too distant future.”
The listing has been slated for 2021 according to government and company announcements, but Al-Falih’s comments raise the possibility that it could be brought forward to next year, though the minister added the caveat that it could also be later. “That’s the announced date but it could slip a little bit, it could come forward a little bit,” he said.
The successful completion of a $12 billion international bond by Aramco, which attracted more than eight times that amount in interest from investors, has given Aramco a new confidence in international capital markets, in equity as well as bonds.
Al-Falih also said that the intended acquisition of petrochemicals giant SABIC from the Public Investment Fund would also increase its capital-raising ability.
“When the Aramco-SABIC acquisition is consummated — we hope by the end of this year — it will not only be the largest oil company and gas company by a large margin, but also with the combined company will be a very large company in refining and petrochemicals. So its capital base is going to grow and I think right that its balance sheet has an appropriate level of debt.
“Even if Saudi Aramco stays at the lower end of gearing among its peers, it still has the capacity to offer a lot of debt instruments going forward. So I can tell you for sure that the $12 billion is only the beginning, not the end. It establishes Aramco’s presence in the market,” he added.

 

Al-Falih also indicated that the large amount of disclosure required for the bond issue would be used in the IPO preparation.
“Now that the company has been exposed, investors have reacted so enthusiastically to the company and its quality. We’ve seen the reserves, we’ve seen the financials, we’ve seen the quality in terms of its departmental performance and its safety performance, human capital capability and technology, all of this is appealing.
“It’s been exposed and documented in the prospectus for the bonds and it will be exposed even more in the equity prospectus to come in the not-too-distant future.”
Al-Falih made it clear, however, that the IPO had to await full completion of the merger with SABIC: “Once we’ve done that, the financials are consolidated and exposed to the investors, essentially all the practical steps for
the IPO have been taken both by the company and by the government. So I think we can hit the ground running once we close on SABIC.”
He added that he hoped for speedy approval from regulators for the merger. Finance experts at the conference said that Al-Falih’s comments showed that Aramco and the Saudi government were committed to listing the company, but were skeptical over whether the IPO could happen next year, given the need for full incorporation of SABIC.
“Given the express desire to complete the SABIC deal, it will be challenging to accelerate the time line of the IPO before 2021,” Jamal Al-Kishi, chief executive of Deutsche Bank in the Middle East and Africa, told Arab News. “But I have very little doubt the company will be floated,” he added.
Tarek Fadlallah, chief executive officer of Nomura Asset Management in the region, said: “It seems unlikely that it can take place in 2020 because they’ll want to demonstrate a full year of integration and collaboration with SABIC.”

FASTFACTS

The completion of a $12 billion international bond by Aramco has given it a new confidence in global capital markets.


Japan’s Uniqlo pulls ad after South Korean fury

Updated 21 October 2019

Japan’s Uniqlo pulls ad after South Korean fury

  • South Korean and Japanese relationship is deeply strained by the legacy of Tokyo’s 20th-century expansionism
  • Seoul and Tokyo are currently locked in a bitter trade and diplomatic row stemming from historical disputes
SEOUL: Japanese retail giant Uniqlo has pulled a commercial featuring a 98-year-old US fashion figure from South Korean screens, it said Monday after it was accused of whitewashing colonial history.
South Korea and Japan are both US allies, democracies and market economies faced with an overbearing China and nuclear-armed North Korea, but their relationship is deeply strained by the legacy of Tokyo’s 20th-century expansionism.
The latest example is an advert for Uniqlo fleeces showing elderly fashion celebrity Iris Apfel chatting with designer Kheris Rogers, 85 years her junior.
The last line has the white-haired Apfel, asked how she used to dress as a teenager, innocuously responding: “Oh my God. I can’t remember that far back.”
But Uniqlo’s Korean arm subtitled its version of the ad slightly differently, reading: “I can’t remember things that happened more than 80 years ago.”
That would put the moment as 1939, toward the end of Japan’s brutal colonial rule over the Korean peninsula, where the period is still bitterly resented, and some South Koreans reacted furiously.
“A nation that forgets history has no future. We can’t forget what happened 80 years ago that Uniqlo made fun of,” commented one Internet user on Naver, the country’s largest portal.
The phrase “Uniqlo, comfort women,” in reference to women forced to become sex slaves to Japanese troops during the Second World War, was among the most searched terms on Naver at the weekend, and demonstrators protested outside Uniqlo shops on Monday.
Seoul and Tokyo are currently locked in a bitter trade and diplomatic row stemming from historical disputes, and South Korean consumers have mounted boycotts of Japanese products.
Uniqlo — which has 186 stores in South Korea — has itself been one of the highest-profile targets, while Japanese carmakers’ sales dropped nearly 60 percent year-on-year in September.
The company denied the allegations in a statement, saying the text was altered to highlight the age gap between the individuals and show that its fleeces were for people “across generations.”
“The ad had no intention whatsoever to imply anything” about colonial rule, a Uniqlo representative said on Monday, adding the firm had withdrawn the ad in an effort at damage control.
Analysts said the controversy demonstrated the politicization of the neighbors’ complex history.
The reaction was excessive, said Kim Sung-han, a former foreign affairs vice minister who teaches at Korea University, involving a “jump in logic” that “assumes everything Uniqlo does is political as a Japanese company.”
“I don’t see how her remark could be linked to the comfort women issue,” he added. “This is overly sensitive.”