Hong Kong has garnered interest in soliciting oil giant Saudi Aramco for its initial public offering.
Hong Kong Chief Executive John Lee arrived in Riyadh late last week for talks with Saudi Aramco officials for a possible secondary listing in the city.
An ability to tap into mainland China and greater attraction for Middle Eastern investors given rising geopolitical tensions in the US and China are major pull factors for the Asian business hub.
“With our pool of professionals and free flow of capital, Hong Kong has been a popular destination for sovereign funds and companies [for listings],” Lee said earlier.
With a market capitalisation of US$2.4 trillion in 2022, the world’s largest oil company exceeded iPhone maker Apple as the world’s most valuable company.
Hong Kong Exchanges & Clearing (HKEX) chief executive Charles Li said a Hong Kong listing would help Aramco to attract huge Chinese demand for its shares.
“It’s going to provide compelling benefits because they are able to use the listing to anchor very massive Chinese demand [for] the IPO,” Li told Reuters.
“It will become a great platform for the two major sovereigns to use that as a potential platform for [a] broader level of financial or strategic investment decisions,” Li said, referring to China and Saudi Arabia.
The Hong Kong Stock Exchange is now Asia’s third-largest bourse based on market capitalisation, after Tokyo and Shanghai.
Aramco considered Hong Kong as a candidate for an IPO in 2019, but later opted to list on Riyadh’s Tadawul exchange, with a simultaneous listing of its US depositary receipts in New York.
“Saudi Aramco’s businesses are very diversified with its different subsidiaries. I will try my best to encourage them to come to Hong Kong for participation, including listing in the city,” Lee told the South China Morning Post.
Aramco is reportedly looking at selling a stake of up to 2.5%, worth almost $50 billion, through a secondary listing on domestic and international exchanges.
The latest listing of Aramco’s refining unit, Luberef, raised $1.3 billion, becoming the biggest listing on the Tadawul exchange last year.
The world’s largest crude oil exporter is reportedly planning an IPO of its trading arm, Aramco Trading Company, potentially valuing this subsidiary at more than $30 billion.
Bloomberg has reported that Aramco is said to be working closely with key investment bankers including Goldman Sachs, JPMorgan Chase and Morgan Stanley as it studies the potential listing of its Aramco Trading subsidiary.
Aramco is expected to offload up to 30% of its trading arm, a move which is in line with Saudi Arabia’s long-term strategy to raise money from non-core assets and continue diversifying its economy.