The proposal to sell shares in Saudi Aramco, the world's biggest oil company, stunned the financial markets last year.
Muhammad bin Salman, now Saudi Arabia's crown prince, promised that it would be the biggest initial public offering of all time, valuing Aramco at $2 trillion. It was to be the centerpiece of his plan to transform the Saudi economy, reducing its dependence on oil. It was meant to foster financial transparency and accountability in one of the world's most hermetic kingdoms. Above all, it would cement the young prince's image as a bold modernizer soon to inherit the throne.
Alas, youthful impatience appears to have got the better of him.
His tendency to micromanage the IPO and vacillate over where Aramco should be listed has caused delay and confusion. Matters came to a head recently when advisers, speaking anonymously, and company executives doing the same, gave conflicting reports, suggesting a mutinous atmosphere.
The kingdom's advisers say privately that the decision to list in New York or London has been postponed, and that the plan "for now" is to issue shares on Riyadh's puny Tadawul exchange, with a private placement possibly to Chinese investors. But Khalid al-Falih, the oil minister and Aramco's chairman, insisted the IPO would go ahead at home and abroad next year as originally planned. Company officials scorn the idea of listing only on the Tadawul, which would be swamped by an Aramco IPO.
The confusion appears to have originated from the royal palace. From the outset, MBS, as the crown prince is known, has insisted that the firm should be valued at no less than $2 trillion, and that the IPO should happen next year.
He had not fully appreciated either the threat of lawsuits related to the terrorist attacks of Sept. 11, 2001, that could result from listing on the New York Stock Exchange, or the complexities of issuing shares on the London Stock Exchange, where institutional investors are angry about efforts to water down listing rules for Aramco. He wrongly assumed that, given the huge fees promised to bankers and advisers, other actors in the world of finance would bend the knee.
Listing initially on the Tadawul only, as well as doing a private placement, may be a misguided attempt by MBS to skirt some of these difficulties, advisers say. It is seen as a way to promote the Saudi capital markets, and avoid the impression of selling off the family silver to foreigners.