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- Saudi officials suspect a delay in Saudi Aramco's IPO after drone attacks reduced Saudi oil production, the Wall Street Journal reported.
- Officials would wait for clarification on the damage before going ahead.
- The attack could lower the valuation of the company even if the price of oil continues to rise. The assessment of Aramco had not taken into account the risks associated with such serious attacks, said a WSJ official.
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Saudi authorities plan to postpone the initial public offering of state-owned Saudi Aramco after drone attacks have reduced Saudi oil production, the Wall Street Journal reported.
Before proceeding with the IPO, officials seek clarification on the damage to Saudi Aramco, according to the WSJ. The threat of new attacks is a new risk that could ultimately weigh on the revenues and profits of society. Investors may in turn be reluctant to invest in Aramco.
The key metric of the valuation of the company is the price of oil. Although the 20% increase in the resource following the attacks may appear to be a positive factor for Aramco's net income, there is considerable concern that geopolitical risks may become increasingly important. Outweigh this impact.
"The most natural thing to do is to see the risk premiums go up, which would reduce the valuation," said a WSJ official. "In the current assessment, Aramco does not count for such serious attacks."
The advisor added that "the high risks will offset these valuation hikes" resulting from an increase in the price of oil.
The Saudi authorities want to assess the company at $ 2 trillion, but other bankers and even Aramco executives say the company's value should be lower, at around $ 1.5 trillion, according to the WSJ. After the attack, officials and advisers said that it may be necessary to further reduce Aramco, up to $ 300 billion.
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Saudi Aramco was to go public by the end of the year or early in 2020 as part of a two-part IPO, which would allow it to sell part of the company in the local Saudi market, then list its shares in international markets. The company hopes to raise $ 100 billion through this listing, making it the largest IPO in its history.
The attack comes just after a leadership upheaval at Aramco. Prince Abdulaziz bin Salman, the eldest brother of Crown Prince Mohammed bin Salman, was appointed Minister of Energy on 7 September.
In addition, Yaser Rumayyan, who heads Saudi Arabia's largest sovereign wealth fund, has held the leading position at Aramco. Both posts were previously held by Khalid al Falih, who had been relieved earlier this month.
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