The call, which came as the president flew from Honolulu to Tokyo, followed the president tweeting his hope that the listing would occur on a U.S. exchange, raising the political stakes for what would be the largest initial public offering.
Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!
— Donald J. Trump (@realDonaldTrump) November 4, 2017
“Important to the United States!” Trump said in the Twitter post from Honolulu early Saturday.
Trump’s tweet, sent hours before he was set to depart for an 11-day tour of Asia, came out of the blue for Aramco, according to a person familiar with the company, who asked not to be named. But the move is consistent with a growing push by American regulators to lure companies to U.S. stock exchanges, according to Bloomberg.
Trump told reporters aboard Air Force One after the call that he was motivated to send the tweet because the Aramco IPO “will be just about the biggest ever” and the U.S. wants “to have all the big listings.” The Saudis were not currently looking at listing on a U.S. exchange “because of litigation risk, and other risk, which is sad,” he said.
‘Energy Geopolitics’
“I want them to very strongly consider the New York Stock Exchange or NASDAQ or frankly anybody else located in this country,” Trump said.
The tweet was “energy geopolitics in action,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former senior oil official in the Obama administration.
“At a time when the Saudis are looking for the U.S. to get tougher on Iran, the Saudi-Russian relationship is warming, the Saudis are trying to attract international private capital, and the Chinese are rumored to be considering taking a piece of Aramco, Trump’s personal plea to list in N.Y. raises the diplomatic stakes of Aramco’s decision.”
A spokesperson of Saudi Aramco declined to comment, as did Kristen Kaus, a spokeswoman for the Intercontinental Exchange Inc.-owned NYSE.
$100 Billion
The Aramco IPO could be the world’s largest, with the Saudi government hoping to raise $100 billion selling just 5 percent of the company. It is the centerpiece of Crown Prince Mohammed bin Salman’s “Vision 2030” reform plan, intended to diversify the kingdom’s economy and invest more heavily in infrastructure.
Although analysts and industry executives have said that figure is probably too high, even if Aramco raises half of it, it will be still double the current largest IPO, the $25 billion raised by Chinese group Alibaba Group Holding Ltd. in 2014.
While other politicians including British Prime Minister Theresa May and Japanese Prime Minister Shinzo Abe have lobbied Riyadh to attract Aramco to their domestic exchanges, Trump’s tweet is so far the most public call to Riyadh.
Prince Mohammed is currently deciding where to stage the offering. Choosing New York in addition to Tadawul, the Saudi exchange, could boost the longstanding strategic alliance between the two countries. Lawyers and bankers working on the IPO had concerns about a New York listing, however, in part due to to strict regulations about oil-reserves disclosure, accounting rules and the potential for litigation.
On top of that, Saudi Arabia has vehemently complained about a U.S. law passed in September 2016 that allows families of the Sept. 11, 2001, terror-attack victims to sue the kingdom.
Overcoming Barriers
In late October, Saudi Finance Minister Mohammed Al-Jadaan became the first senior official to openly discuss the possibility of forgoing the international part of the IPO. And Khalid Al Hussan, chief executive officer of Tadawul, said the Saudi exchange had the “aspiration” to handle the listing alone.
Ali Shihabi, executive director of the Arabia Foundation think tank in Washington, said in a Twitter post Saturday that barriers to a U.S. listing could be overcome. “If the US govt/congress can grant Aramco sovereign immunity on the NYSE then may be possible,” he wrote.
Trump’s focus on capital markets was a change from his usual targeting of political foes. But back in December, when Trump interviewed U.S. Securities and Exchange Commission Chairman Jay Clayton for the job, the then-president elect was fixated on the steep decline in U.S. IPOs, people familiar with their discussion have said.
As an attorney working in private practice, Clayton’s career highlights as a deals lawyer include working on Alibaba’s IPO. Since taking over as SEC chair in May, Clayton has said bolstering U.S. capital markets is among his top priorities. In September, he said he was “troubled” many companies were choosing not to go public. The SEC is Wall Street’s main regulator and oversees the NYSE and other exchange operators.