Skepticism grows about the offer of part of ARAMCO shares on the stock market

Saudi Arabia has sought billions of dollars to diversify its mortgage economy thanks to the IPO of oil giant Aramco, but with the delay of the IPO, it has started talking about alternative plan. The Kingdom announced in 2016 that it would put up to 5% of Aramco's stock market shares to help fund the country's largest investment fund, a move considered too important. . But officials at Aramco have repeatedly stated that market conditions are unfavorable to the process, which could delay the IPO earlier this year.

Analysts and experts doubt that this can happen. The company is considering another approach in which billions of dollars will be mobilized

Amin Al-Nasser, CEO of Aramco, announced last week that preliminary talks were underway to acquire a strategic stake in the petrochemical giant Saudi SABIC. Saudi Arabia through the Saudi investment fund, 70 percent of the company, which was founded in 1976 and is the fourth largest in the world in its field.

Al-Nasser said in an interview with Al Arabiya television channel that the agreement, if it was concluded, "would affect the timing of the subscription offer of # 39; Aramco. "

– "Account Balancing Process" –

Experts believe that Aramco's acquisition of the Saudi Investment Fund will be an alternative to raising the funds required for the Fund, but it's a complex plan .

SABIC is the largest publicly traded company in the Kingdom, worth about $ 100 billion – the amount that the government sought to obtain from the IPO of Aramco

Karen Young, a researcher at the Gulf Arab Institute in Washington, says that Saudi Arabia's approach to fundraising is "balanced."

"Aramco and SABIC are public companies, but they are budgets". Two separate entities. "

" If Aramco buys the largest stake in SABIC, it will inject funds into the public investment fund and will be able to rely on this important asset to obtain loans ", if necessary. [19659002] Who hopes to bring its assets to more than $ 2 trillion by 2030, in the KBI group Among the largest global investments, including Uber, as well as a large economic area in the northwest of the countries, including investments of more than $ 500 billion in Jordan and Egypt under the name of "Nyum"

The Fund wishes to have the necessary liquidity The Kingdom's oil minister, Mohammed al-Sabban, has written in a letter to the Saudi oil minister, Mohammed al-Sabban, tweet on twitter "if" The liquidity of the public investment fund following Aramco's acquisition of its stake in SABIC could result in a complete withdrawal of the IPO of "Aramco locally or locally."

"But the important question is how does the fund spend these huge amounts."

Financing of the acquisition of a strategic stake in SABIC: Aramco is considering for the first time to enter the international bond market, in addition to possible bank loans, according to the 39 Bloomberg News economic agency.

Experts Say They Use Debt Rather Than Selling Stock Investors Add Greater Risk to Kingdom Strategy

– Delay and Hesitation –

The Wall Street Journal Cites Leaders Who say that the two companies are not enthusiastic about the agreement, but "acquiesce after the pressure" of the crown prince's advisers.

"I see no valid reason for Aramco to take a stake in SABIC," said Hussein Askari, a professor at George Washington University. "It does not make it easy to manage entities." [19659003] Proponents of the case say that Aramco, which has its own petrochemical unit, could benefit from the purchase of shares SABIC The agreement will allow Aramco to extend its Petrochemical activities, which will make it a more integrated energy company in anticipation of the after-oil.

The Saudi authorities claim that the agreement with SABIC will allow the Saudi oil giant to increase its value and chances of success.

Stock exchanges in London, New York and Hong Kong are competing for part of the IPO

But experts doubt Aramco's ability to get a $ 2 trillion valuation that the Prince heir hopes. The IPO will push for an unprecedented review in the company's accounts, leading to delays and hesitations in the process.

Within the company, the transfer of a number of executives who were working on the IPO at other sites, an indicator of slowing down the process

"Aramco can make the purchase as a way to transfer cash to the investment fund and to the satisfaction of the fund and Crown Prince, hoping to avoid offering the IPO. "