Saudi Aramco cleans up financials ahead of IPO: FT

Saudi Arabian Oil Co. (Saudi Aramco) is seeking to untangle its finances from those of the state as the Kingdom targets a $2 trillion valuation ahead of the company’s planned initial public offering in 2018, Financial Times has reported, citing unnamed sources.

This involves shifting certain liabilities from the company's accounts to that of the government.

A royal decree was issued in March to slash the corporate tax rate for Saudi Aramco from 85 percent to 50 percent, seen as facilitating a higher dividend to future shareholders and boosting its market value.

The company will present 2015 and 2016 financial statements alongside pro-forma accounts for 2017 to investors for the first time ahead of the IPO.

Advisers have warned executives and officials that should these matters— which present huge financial and legal risks for the company— not be resolved, they could cost Saudi Aramco hundreds of billions of dollars in lost valuation.

The kingdom plans to gradually increase energy prices towards market rates throughout 2017. 

The Saudi Aramco flotation is the centerpiece of Prince Mohammed’s plan to overhaul the Saudi economy and diversify the country away from oil. IPO proceeds will be ploughed into alternative industries such as technology and tourism.