Saudi Aramco Reviews IPO of $30 Billion Trading Subsidiary 'Big Catch'

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] Saudi state-owned oil company Aramco, which surpassed Apple to become the world's largest company by market capitalization thanks to rising oil prices, is reportedly considering an initial public offering (IPO) of its trading subsidiary 'Aramco Trading,' Bloomberg reported on the 17th (local time).

If the IPO is decided, Aramco Trading is expected to be the largest IPO of the year. So far, the largest IPO this year has been LG Energy Solution, valued at about $10.8 billion, but Aramco Trading is projected to exceed $30 billion.

According to an anonymous source, Aramco is currently reviewing the possibility of Aramco Trading's IPO with Goldman Sachs, JP Morgan Chase, and Morgan Stanley. The sources said Aramco may sell about 30% of Aramco Trading's shares.

Most major oil companies do not take their trading subsidiaries public because important information related to profit generation could be exposed. Aramco is also concerned about this and is weighing the profits and losses associated with the IPO, the source said.

Aramco is also reportedly considering an IPO of its refining subsidiary, Lubreff.

The reason Aramco is consecutively considering IPOs of its subsidiaries is interpreted as an intention to secure as much capital as possible while oil prices are high and the value of oil companies is at its peak.

Saudi Arabia plans to continue increasing oil production, expecting oil and gas prices to remain strong for the time being. However, in the long term, it is pursuing 'Saudi Vision 2030,' which aims to diversify the oil-centered industrial structure. The funds raised through the IPOs are expected to be used as resources to achieve Saudi Vision 2030.