The initial public offering of Saudi Arabian Oil Co., set to be the world’s most valuable, has the potential to bring far-reaching changes to the Saudi equity market and alter investor perceptions of the region, says Michael Bolliger, head of emerging-market asset allocation at UBS Wealth Management.
The share sale will turn unprecedented attention on the Saudi market, says Zurich-based Bolliger, who helps oversee the investment strategy for $2.1 trillion in assets.
Below is a Q&A with Bolliger about the implications of Aramco’s share sale, which is estimated to raise as much as $100 billion, assuming 5 percent of the company is offered to investors.
Q: Will the IPO change your view of Saudi Arabia?
A: Aramco is the largest company in the world. Its partial privatization will likely draw much attention to Saudi Arabia. And, as a likely part of a broader privatization program of state-owned companies, it reinforces the message that the kingdom’s strategy is to develop a domestic capital market and gradually open it up to international investors.
The IPO would increase the depth of the domestic market. We would expect transparency to also improve as this is a prerequisite to further liberalization. Aramco is preparing to publish its accounts for the first time, in an industry-friendly format, a big step.
Aramco is also said to…