I think the picture is not entirely clear.
There has been, as you know, there has been no formal announcement
by Saudi Aramco as to the timing of the IPO.
From rumors in the market that work is still ongoing.
But it's yet to be seen.
But I think it's more likely now that if the IPO is going to happen,
it's not going to be 2018.
It would be 2019 or even beyond that.
And if that does happen again beyond that time frame, are we
talking about a discrepancy in the valuation that Saudi Arabia wants to
get with this IPO and what the market thinks it should be fetching?
Yeah well, again, I think that's yet to be seen. It just depends on the timing
of the IPO, the market conditions at the time. What we're hearing
is the IPO is not the only avenue that the Saudi Aramco is looking at.
There could be other options as well.
Mohammad, do you think that with the Xiaomi listing is dual class
share structure in Hong Kong, do you think that gives Hong Kong
an edge over the U.S. or the UK to grab the listing of Saudi Aramco?
Well I think Hong Kong has been a one of the main markets that Saudi Aramco
is looking at. And I think given the size of this IPO, I think it's going to
we will be looking at multiple markets probably. So yeah certainly
I think that this is a positive development. But again it's not probably going to be one
of many factors when determining the fund and listing venues.
And Mohammad, looking outside Aramco, what else are you watching for in the IPO
pipeline, specifically in Saudi Arabia?
Are you expecting we get an uptake of listings for the rest of the year?
That is correct. And probably just before I look, before we look forward,
that's probably useful to look a little bit on what was the activity in the last 18 months or so.
So in 2017, 2017 was a relatively good year compared to 2016.
The expectation was that the upward trend would continue in 2018.
Unfortunately that didn't materialize for the first six months of 2018.
There was, in fact, a drop in the volume and value of IPOs that came to market,
compared to 2017.
But we still believe that the second half of 2018 will hopefully see an increase in IPO
activity and that is really driven by improved market conditions,
increase in oil prices, and as you all know, the governments around the region,
including Saudi Arabia, has announced a privatization program
and that one of the avenues that would be followed, would be to IPO some of the
state owned or state bank assets.
And we think that will have a positive impact on the whole on the IPO market
in general.