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Ruthless prince Mohammed forcing Saudis to buy Aramco shares

A report by the Bloomberg shows Saudi households and investors have no choice but to buy overvalued shares of Saudi Arabia’s state oil company Aramco under pressure from “ruthless” de-facto ruler Prince Mohammed bin Salman, known as MbS.

The Bloomberg report published on Monday said that Saudis are forced to accept the ruthless manners of Prince Mohammed, the young son of Saudi Arabia’s king Salman, as he goes ahead with an initial public offering (IPO) planned for Aramco in the local stock market.

“Many of the rich Saudi families that will now become key investors in Aramco learned the ruthlessness of Prince Mohammed during the crackdown that saw many arrested in the Ritz Carlton hotel in Riyadh in 2017,” said the report making a reference to MbS decision to jail a group of notable Saudi princes and investors in a hotel in the Saudi capital when he had just risen to highest levels of power in the Arab country.

The report said MbS and his aides had suddenly decided on Sunday to cancel an IPO for Aramco, the world’s largest oil company, in major international markets after they understood that foreign investors were no longer interested in paying exorbitant sums for the shares of the company.

“So poor is the international appetite for the deal, even at the lower valuation, Saudi Aramco decided at the last minute against marketing the IPO in the US, Canada and Japan,” said the report.

Given the tepid interest existing abroad for Aramco’s IPO, prince Mohammed has reportedly forced the Saudi banks to ease lending restrictions to allow households and investors to buy 1.5 percent of shares of the company.

The Bloomberg report said the MbS has not only lowered the amount of stakes on offer in Aramco’s listing but he has also downgraded his valuation of the company to $1.6-1.7 trillion, much lower than the $2-trillion estimate he had provided in 2016.

“The sale will be a long way from the seismic global financial event Prince Mohammed touted in back in 2016,” said the report.  

Saudi Arabia’s failure to raise the money expected from Aramco’s listing comes more than two months after oil facilities run by the company in eastern Saudi Arabia came under attacks by a militia-led government in neighboring Yemen.

The drone attacks inflicted huge losses on the company and on Saudi Arabia’s reputation as a stable supplier of energy to the global markets.

Riyadh has consistently claimed that it has restored production in its oil facilities. However, investors believe Saudi war on Yemen and its involvement in other regional conflicts still poses a threat to its economic stability.