Trouble, is that you? Aramco speaks to investors on its IPO woes

Saudi Aramco on Monday conducted a meeting with the Abu Dhabi Investment
Authority (ADIA) officials to discuss the oil giant’s share sale deal. The United
Arab Emirates (UAE) meeting between the company and the authority officials saw the
two parties air the views on an investment deal that would potentially raise $25.6bn,
sources familiar with the dealings told Reuters.

But even with fairly attractive numbers, Aramco has not been able
to net an anchor or cornerstone investor for its IPO which could go down in
history as the biggest listing ever. Other than ADIA, the
oil company has also held talks with Singapore‘s sovereign wealth fund, GIC as well as
the Kuwait Investment Authority (KIA).

The not-so-publicized meeting between Aramco’s and ADIA officials comes
after the second leg of a Gulf marketing effort by Aramco and its advisers.

Another separate roadshow was held in Abu Dhabi on Sunday.

When contacted by Aljazeera for comment, both ADIA officials and
those of Aramco declined to issue any statements on the matter.

“Aramco has stepped up a gear this month, but the signs are
that it is unlikely to be the blockbuster sale that the Kingdom once hoped
for,” the London-based Capital Economics said on Monday.

It added: “And plans for
this sale to be followed by an international listing seem to have lost momentum”.

But sources also indicated that
Aramco has also cancelled a series of roadshows as a result of what is believed
to be low foreign institutional investors‘
interest. And some of the investors who attended the Sunday roadshow in Abu
Dhabi also expressed their reservations about having a stake in the company.

One of the fund managers said
that the state-owned oil company’s future weight in the region’s benchmark
indices was a motivating factor for the Middle Easterners and North Africans to
invest in the firm.

However, Aramco’s dividend
yield of 4.4% is said to be less attractive compared to many oil trading companies,
another fund manager said. Take for instance Royal Dutch Shell, which has a 6.48%
dividend yield.

Aramco is looking to give away
a stake of 1.5% in the company after settling on a valuation of between $1.6 and
1.7 trillion. The company has set a five-year base dividend of $75 billion.