Saudi Aramco’s $2 Trillion Zombie IPO

It was the moment Saudi Arabia’s reforming young prince told the world he meant business. In early 2016, Mohammed bin Salman said he planned to sell shares in the kingdom’s crown jewel: Saudi Aramco, the giant energy company that produces 10 percent of the world’s oil and finances the Saudi state. The initial public offering—planned for 2018—would be the deal to end all deals, raising more than $100 billion for a new sovereign wealth fund, creating the world’s most valuable listed company, and funneling hundreds of millions of dollars in fees to Wall Street’s elite banks. MBS, as the 32-year-old crown prince is known, said the company would be worth at least $2 trillion—more than double the current market valuation of Apple Inc.—and perhaps as much as $2.5 trillion.

Two years later, things look very different. A combination of hubris on the valuation, an overambitious timetable, and indifference—if not derision—from global investors doubtful that an IPO would benefit them, has forced Riyadh to delay the sale until at least 2019. And many observers—including members of the company’s senior leadership—doubt whether it will happen at all. Aramco has become the zombie IPO.

Add Donald Trump to the mix. While the U.S. president has said he’s excited about the idea of Aramco selling shares in New York, keeping the price of gasoline under control seems far more important. With Republicans facing tough midterm elections in November, he’s pressured Saudi Arabia to pump more oil, and cheaper crude means a lower valuation for the company.