Reports Emerge Stating Delay of Saudi Armaco to 2019

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Reports Emerge Stating Delay of Saudi Armaco to 2019

The government of Saudi is allegedly preparing to postpone the much anticipated debut of Saudi Armaco in the stock market until 2019. The 2018 launch is still the goal, though that timeline may turn out to be too ambitious, according to the latest report by Bloomberg.

Saudi Armanco consequently denied such reported delay and stated that the work of launching the IPO is on track. If the report is to be believed, however, it would be another indication of the difficulties that the Gulf region governments face when it comes to the privatization of the assets which are their most valuable, more often than not. These businesses are complex and large and have not faced any kind of public scrutiny before, and also do not have the basic corporate governance culture or structure that nearly all investors expect. Installing these systems do take time.

In addition to this, the governments also face a complicated act of balancing in which they try to separate out the units that are best suited for privatization. They need to single out the business areas which will attract most interest from investors but also want to retain control of the state over the underlying gas and oil fields.

In the end, and possibly most crucially, any moves to sell shares in local oil corporations are more often than not, politically divisive. That was experienced in January this year, when employees at the Kuwait Oil Company revolted against the plans of the company to privatize that segment of the business. All the governments in Gulf understand that they have to trade carefully if they are dodge any kind of public backlash.

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