Via Financial Times

Saudi Arabia has called off plans to formally market shares of its state oil company outside the kingdom and other Gulf countries ahead of its long-awaited initial public offering, according to people familiar with the matter.

The decision marks the latest setback for the kingdom, which will now seek to raise about $25bn through the flotation of Saudi Aramco — just a fraction of the $100bn it once sought — by relying heavily on local investors and from those in the region.

“It’s all local now,” said one person briefed on the process. Bankers learned on Monday that no formal European investor meetings would take place, a day after roadshows in the US and Asia were called off.

Saudi Arabia is attempting to get the oil group’s stock market listing over the line at a valuation acceptable to the powerful Crown Prince Mohammed bin Salman, for whom the listing was at the heart of economic reforms.

After pushing for a $2tn valuation for nearly four years, Saudi authorities pared back their expectations in an effort to entice investors at home and abroad. It then revealed a price range on Sunday that would value the company at between $1.6tn and $1.7tn.

That figure is still more than foreign institutions have been willing to pay, a message that was conveyed to the kingdom’s leadership several times in recent days, two people familiar with the matter said.

Saudi Aramco executives were due to go to cities in the US, Asia and Europe but now meetings are likely to be restricted to Saudi Arabia, the UAE, Kuwait, Bahrain and Oman, according to one person familiar with the matter.

READ ALSO  Stock exchanges prepare to activate their Brexit contingency plans

Bookbuilding for the IPO is set to continue until December 4. Shares will price on December 5 and trading is expected to begin on Riyadh’s Tadawul exchange a week later.

Saudi Arabia plans to sell 0.5 per cent, or 1bn shares, of the company to local retail shareholders, luring them with a bonus share scheme as long as they hold the stock for a fixed amount of time.

The sweetener comes as Saudi authorities have leaned on local banks to make loans available to investors and as some wealthy families have been pressured to invest in the IPO.

Saudi Aramco declined to comment.