A while ago Saudi Arabia decided to list its government-owned oil and gas company, Aramco, both on its own national stock exchange as well on at least one foreign bourse.  The potential listing date is thought to be some time next year.  The Saudis are rumored to be thinking of selling 5% of the company for $100 billion–implying a $2 trillion valuation for the company as a whole.

Why the long delay?

It’s to whip a government bureaucracy into palatable enough shape for foreign investors, as well as local citizens, to want to buy shares.  It’s also to find a foreign stock exchange big enough, and willing enough, to act as host.  “Willing,” in this case, means among other considerations, being able to accept the corporate opacity that the Saudi government would surely like to surround the operations of its national treasure.

While world interest centers on trying to figure out what stock exchange is the most eager to compromise its governing principles in order to achieve a huge payday for its domestic brokerage firms (my answer:  all of them), I don’t think this is the most interesting question.

My query is why the offering.  I see two possibilities:

–the Saudi government hopes to achieve greater efficiency of operations by opening Aramco management to the scrutiny of the investing public

–the Saudi government wants/needs the $100 billion proceeds to fund its government spending.

I’m sure the reality is that both are key objectives.  The question, however, is which of the two is uppermost in Riyadh’s mind.

If it’s the former, then the stock is likely, I think, to be a perennial laggard.   And it will give a black eye to whatever foreign listing venue it chooses (London and New York are understood to be the frontrunners, although Hong Kong is also big enough to handle an offering of Aramco’s intended mammoth size).

If the latter, the stock may be worth taking a chance on.  After all, it does have a massive amount of extremely low-cost oil and gas reserves.  However, whatever the case, Aramco appears destined to miss the current market, in which companies like Snap and Blue Apron floated successfully,  and which would have been the ideal time for any issuer to come public.