Saudi Aramco is a ‘polarizing stock’, says an energy analyst

The oil behemoth owned by the Saudi-state marked its gigantic IPO lately by entering the local market.

However, analysts are seeing the corporate governance as a key risk for investors.

“How do we invest in a company that … is 98% owned by the Saudi government, where the Saudi royal family calls all the shots? It does not matter what independent investors or independent board members think, frankly. It is a very unique, very special situation. Quite a polarizing stock, frankly. Some people love it, and some people will never own it,” Pavel Molchanov, an energy analyst at investment bank Raymond James told CNBC’s “Squawk Box” on Thursday.

By debuting on the country’s stock exchange on Wednesday morning, the state-owned oil company listed 1.5% of its shares locally on the Saudi Tadawul, which is the largest of all-time surpassing the $25 billion Alibaba raised when it marked its IPO in September 2014.

According to Pavel Molchanov, Saudi Aramco is planning to list on international exchanges. But even if that brings in more foreign money, those governance and geopolitical risks mean that it’s “not for everybody,” the energy analyst added.


(Reference: CNBC)
(Image source: Saudi Aramco | Reuters)