SABIC deal likely to result in Aramco IPO delay: reports

Saudi Aramco is in talks to buy a stake in petrochemicals giant SABIC and this would allow the company to delay its planned IPO beyond 2019, local and international media reported on Monday.

It is unclear how large a stake the Saudi NOC intends to buy, but two anonymous sources told Reuters that it intended to become a “majority” shareholder in a deal that could cost more than USD 70 billion. Aramco intends to deal with Saudi Arabia’s Public Investment Fund (PIF), which currently holds a 70% stake in SABIC.

“There is no doubt that the potential acquisition of a strategic stake in SABIC … will delay the IPO,” Aramco’s CEO, Amin Nasser, told journalists.

There has been a flurry of speculation in recent months about likely delays or even a cancellation of the offering, set to be the largest IPO in the world. Saudi officials, which intend to sell a 5% stake in Aramco, have valued the company at more than USD 2 trillion.

The move would also allow Saudi Arabia to increase spending to diversify its economy and up growth.

“The PIF will have more cash to invest and there is no need to IPO now,” one of the sources told Reuters.