The strikes targeting the heart of the kingdom’s energy complex came at a particularly inopportune time. The Saudis are ramping up efforts to take the world’s most profitable company public again. The IPO was shelved last year after an exhausting push exposed just how tedious the process was likely to be, given corporate governance concerns and the Saudis’ insistence on securing a $2 trillion valuation.
Earlier this month, Khalid al-Falih was replaced as Energy Minister with MBS’s half-brother, Prince Abdulaziz Bin Salman, in an ostensible bid to address investor concerns. Aramco has chosen Goldman, JPMorgan, BofA and others for lead roles in the IPO, which was expected to come within months.
Now, though, the timing is in doubt.
The attacks over the weekend underscore the inherent precarity of the company’s infrastructure given its proximity to the conflict in Yemen and vulnerability to strikes launched from Iran or Iraq, where the Quds Force wields considerable sway via a network of powerful militias.
For what it’s worth, this was in the bond prospectus (h/t to Tasos Vossos for the handy screengrab post).
Dow Jones says Aramco executives are pondering whether to reschedule the IPO pending the full restoration of its production capacity to normal levels. The company will continue to give presentations to analysts and bankers as scheduled, sources said.
Moody’s on Monday called the strikes credit negative. “[The] attack highlights the role of geopolitical risk on oil prices, which will likely reflect a risk premium even after Saudi production resumes”, Moody’s Managing Director of Oil & Gas Steve Wood told Bloomberg in an e-mail. Aramco bonds fell to multi-week lows to start the week.
Earlier, Dow Jones said officials and advisers were worried investors might get worried about the prospect of future attacks.