Saudi Aramco is reportedly in talks with some banks regarding its plans for an initial public offering (IPO). However, some industry experts noted that the state energy behemoth's plans could reach a danger zone amid the market's increasing inclination to green technology.
According to Reuters, some industry analysts expressed concerns about how Saudi Aramco will handle questioning from potential investors and shareholders who support climate change advocacies.
The company previously stated that it still believes gas and oil products will retain steam in the global market for decades because renewable energy goods or even nuclear energy cannot, in its current volume, meet demand for more energy.
On the other hand, many governments have already pledged to support the call for reducing or eliminating greenhouse gas emissions. This promise to the environment could place a wedge between Aramco and its supposed IPO.
Asset Manager in London Sarasin & Partners' chief of Integrating Environment, Social and Governance (ESG) unit, Natasha Landell-Mills, pointed out that Saudi Aramco is testing the market's dedication towards achieving a greenhouse gas-free world.
For Landell-Mills, further delays to the company's IPO plans could lead to investors becoming less and less willing to offer a reasonable price. This is especially true after Iceland held a funeral for the world's 700-year-old glacier that was ultimately taken down by climate change.
The oil giant said in a statement that it has invested in studies that would help discover efficient methods for using hydrogen in cars. The company is also investing in research focused on more environmentally-friendly ways of extracting oil through crude conversion.
A $2 trillion valuation is on the table, as laid out by Crown Prince Mohammed bin Salman. However, sources revealed that there are also talks about the company potentially slashing its target. Even if Aramco decides to trim the numbers to $1.5 trillion, it would still be the world's biggest public company ever listed.
On Monday, multiple outlets reported that Saudi Aramco is discussing with several banks as it looks for role-players in its much anticipated IPO. Sources told CNBC that state officials are confident of the IPO coming to life sometime 2020.
A board meeting was attended by bankers last month but it is unclear which banks were provided with requests for the company's debt offering. Still, the debt offering was a success, and many investors have their eyes fixed on what could be the world's most historical IPO confirmation yet.
Aramco has yet to comment on the reports regarding discussions with banks. No details have been provided about the positions and roles up for grabs.
