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ANALYSIS: Is Aramco an attractive opportunity?

The Financial Conduct Authority has raised eyebrows in some City circles by clearing the obstacles to a partial listing of Saudi Arabia’s state oil company Aramco in the UK.


Sebastian Cheek

However, he warns there will be lots of hype around any listing and retail investors need to consider those risks carefully.

Of course, with different parts of the City either opposed to the listing or desperately hoping that it happens, a lot of ‘what ifs’ remain.

But will active fund managers be interested?

Energy specialists Guinness Asset Management says it may be interested, but that may depend on the amount of information made available.

Head of business development Deborah Kay says: “Our view is that so far, as Saudi have published expected tax rates (royalties and corporate tax) for Aramco, but no further information about the economics of the business, we are not yet in a position to assess whether an investment in Aramco presents an attractive opportunity.

“Generally, we will consider investing in emerging market national oil companies (the Guinness Global Energy Fund currently owns Petrochina and Gazprom, for example), so Aramco will not be excluded from our universe of investible companies.

“However, as is the case when we value any company, we will need to estimate a suitable country premium for Saudi to incorporate into our discount rate, commensurate with the risks as we see them.

“In sum, we look forward to Saudi publishing more details before taking a firmer view on the investment opportunity.”