Saudi Aramco has confirmed its position as the world’s most valuable public company. Shares in the oil producer jumped on their second day of trading, touching the $2tn valuation so coveted by the kingdom’s crown prince, Mohammed bin Salman. It is certainly an achievement. At $2tn, it is worth more than technology giants Apple and Microsoft, and bigger even than the top five oil companies — ExxonMobil, Total, Royal Dutch Shell, Chevron and BP — combined. In nominal terms, it is the ninth largest economy in the world.
But these bragging rights are misleading. When the crown prince announced he would take Saudi Aramco public he promised the move would create more transparency. The kingdom’s national champion would be subject to a greater level of scrutiny than ever before. It would help to bring foreign capital into the country — a symbol of its opening up to the world. In practice, he has achieved a pyrrhic victory, one achieved through a mixture of coercion and stage management.
By any measure, this has not been a normal listing. The level of state interference in one of the most well-run organisations in the kingdom has been unprecedented. At every turn, the crown prince and his advisers have sought to determine the price of the offering rather than leave it to the market: wealthy Saudi families have been pressured to buy shares; banks have had to issue loans to retail investors; funds in the kingdom and regional allies, including Abu Dhabi, were asked to bolster the sale after plans to market the listing globally were abandoned. The size of the original stake had to be scaled back to 1.5 per cent.