RIYADH (Reuters) - Saudi Arabia’s stock exchange expects an influx of foreign funds to smooth the listing of national oil firm Saudi Aramco, despite concern among some analysts about whether the market can absorb the huge offer, the exchange’s chief executive said on Sunday.
“Foreign investors are putting in more money — every day we have improved liquidity capacity,” Khalid al-Hussan said in an interview.
The government has said it plans to sell about 5 percent of Aramco, hoping to raise some $100 billion or more in what is likely to be the world’s biggest initial public offer. Officials have said that in addition to Riyadh, Aramco may list on one or more foreign markets such as New York, London and Hong Kong.
Many private analysts think the $100 billion target is too ambitious, but even a $50 billion IPO could strain the Saudi market, which has a capitalization of about $500 billion — especially if the burden is not shared with a foreign exchange.
Saudi Arabia’s biggest IPO so far, the sale of a stake in National Commercial Bank 1180.SE in 2014, raised just $6 billion. In January this year, an advisory council to the government asked the securities regulator to study whether the Aramco sale might destabilize the market.
Hussan insisted, however, that from technical and regulatory perspectives, the Saudi exchange was fully prepared to handle the Aramco IPO, alone if necessary.
He noted that foreign investors were not permitted to buy shares directly in the National Commercial Bank offer.