Can Singapore Land Saudi Aramco (Mother of All IPOs)?

♠ Posted by Emmanuel in ,, at 2/08/2017 05:59:00 PM
Make it big: Singapore competes for Saudi Aramco's $100B IPO listing.
Us Southeast Asians have been closely following the possibility--however remote--of the Singapore Exchange [SGX] landing the biggest IPO of recent times. Saudi Aramco indicated a few months back that it intends to make a public listing. Aramco being the world's largest state-owned oil company, the sums involved will make your head spin with $$$ signs. Not one to pass up a once-in-a-generation opportunity, Singapore has been courting the Saudis assiduously:
The island nation is studying proposals including inviting one of its state investment companies to become a cornerstone investor in Aramco’s IPO, as well as potential Singapore cooperation with the Saudi government on future investments, the people said. Singapore Exchange Ltd. management including Chief Executive Officer Loh Boon Chye visited Saudi Arabia late last year to pitch a listing on the bourse, according to the people, who asked not to be identified as the information is private.

Singapore, the biggest oil trading center in Asia, is hoping a full package of government incentives will give it a better chance of winning a piece of the listing than a standalone proposal from the stock exchange, the people said. Aramco is yet to make a final decision on the venue for the IPO, and Singapore faces challenges from larger international exchanges, the people said.
That said, many others are also approaching the Saudis like fellow Asian financial powerhouse Hong Kong and Canada (of all places):
The country’s plan shows the extent to which Asian economies are vying for a share of the IPO, which is estimated to be about $100 billion in size. Aramco officials have also received pitches on a potential Hong Kong listing for the company, which could come with anchor investments from Chinese funds, people familiar with the matter said last year. Company executives have also mentioned the possibility of listing in London, New York, Tokyo or Toronto.

TMX Group Ltd., the owner of the Toronto Stock Exchange, sent officials to Saudi Arabia as part of efforts by a Canadian consortium that includes major local banks to seek a slice of the IPO, said TMX spokesman Shane Quinn.
Singapore is hardly a shoo-in. Compared to other exchanges, SGX is small fry trading volume-wise:
Singapore’s average daily stock trading was about $761 million last year, compared with $5.8 billion in Hong Kong and $7.4 billion in London, the data show.
Moreover, the international (read: non-Singapore-domiciled) IPOs Singapore has had in recent years are not uniformly impressive:
The chequered history of foreign listings in Singapore is another factor. While the 2006 float of Chang beer maker Thai Beverage Pcl has outperformed, Hutchison Port Holdings Trust's $5.45 billion debut in 2011 went the other way. Units never closed higher than their $1.01 offer price and are currently at $0.43. Plans to lure English soccer team Manchester United also came to naught, putting another nail in the coffin of Singapore's rather ambitious desire to become a global sporting hub.
My intuition is that the Singaporeans will give it as good a go as possible, but they ultimately will not be disappointed too much if the IPO is not made there since they're decidedly underdogs here. Though I may be wrong, I am fairly confident that the US and UK are out of the running: the latter is too Islamophobic with a President Trump, while the latter is undergoing the transitory pains associated with Brexit.

Stay tuned.

2/21 UPDATE: If news reports are to be believed, Singapore isn't even among the contenders for the Saudi Aramco listing, with authorities favoring the New York Stock Exchange [NYSE] and the London Stock Exchange [LSE]:

Saudi Arabia is favouring New York to list state oil giant Saudi Aramco IPO-ARMO.SE, while also considering London and Toronto for the prospect of floating the firm, the Wall Street Journal reported on Monday.

Saudi officials also talked to exchanges in Singapore, Hong Kong, Tokyo and Shanghai but are unlikely to pursue listing in those places, the newspaper said, citing people familiar with the matter.
I am somewhat at a loss as to why the Saudis would prefer Trump's America. After all, they provide next to no US jobs and would certainly qualify as "stealers" of them from Trump's perspective. Listing stateside would make Aramco more vulnerable to US protectionism. Don't forget Trump's Islamophobia either, which certainly would find a US-listed foreign oil major a big, juicy target to demagogue against. Meanwhile, the UK is about to leave the EU, reducing the pool of potential investors.