By: Faisal N. Aldosssary
Aramco, one of the world’s largest globally integrated energy companies, has demonstrated foresight and adaptability in navigating complex market dynamics and shifting regulatory environments. Notably, the company successfully executed the largest Initial Public Offering (IPO) in history while upholding a steadfast commitment to transparency in public disclosures as well as shareholder value amidst times of economic and geopolitical volatility. Vice President & Assistant Controller, Musaad Al-Sayouhi, characterized this process with a singular word: resilience. But where does such resilience stem from?
The Young Leaders Advisory Board (YLAB), a group of young professionals tasked with the mission of “preparing the company for the youth, and preparing the youth for the company”, coordinates interactive and informative events on a recurring basis. Amongst these are the YLAB Café sessions which aim to shed light on thought-provoking topics of strategic importance by hosting prominent industry figures and subject-matter experts.
The most recent YLAB Café session delved into the intricacies of process and implications of the company’s Initial Public Offering (IPO) in December 2019 and took place on November 11th, 2024 at the EXPEC Advanced Research Center (EXPEC-ARC). With the presence of an esteemed guest, Musaad Al Sayouhi, Vice President & Assistant Controller under the Finance business line, and the deft moderation of YLAB member Sara Alshamri, the enthralling discussion revolved around Mr. Al-Sayouhi’s involvement and perspective within the overall development and preparations for the company’s IPO, how it has evolved since then, as well as its future outlook.
Prior to Aramco’s becoming a publicly traded company, it was wholly-owned by the government and described to exhibit high degrees of confidentiality, with financials only available to a select number of groups within the company and government. In 2016, a combination of opportunity and preparation led to Mr. Al-Sayouhi joining the Finance IPO Readiness team, which was responsible for preparing the company to be listed publicly as early as Q1 2017.
As such, Aramco needed to transform from a privately-owned company with limited reporting obligations to a transparent enterprise with an obligation to disclose information publicly to investors and other stakeholders. This required strict adherence to relevant financial disclosures for publicly-listed companies.
As Aramco geared up for its historic IPO, the company faced significant pressure to rapidly adapt its financial disclosure practices to meet the stringent demands of public listing. Specifically, Aramco accelerated its transition from biannual disclosures to quarterly public reporting, necessitating enhanced transparency in its financial statements.
Moreover, the company adopted International Financial Reporting Standards (IFRS)-compliant segment reporting, incorporating an expansive range of financial metrics. By expediting these compliance measures, Aramco ensured alignment with the rigorous financial disclosure requirements expected of listed entities, thereby enabling a successful IPO.
For instance, the company mindset shifted to evaluating upstream and downstream individually in terms of performance and profitability, rather than as a lump sum. This change in Aramco’s processes created a sort of “healthy tension,” as described by Mr. Al-Sayouhi, leading to a step-change within the company’s approach towards improving performance in each business line rather than strictly focusing on the checks and balances of “non-direct expenditures (NDE), manpower, and capital.”
With its headcount of over 70,000 employees, the global reach of the company cannot be understated with over 370 affiliates worldwide. When asked about the journey to becoming a publicly traded company, Mr. Al-Sayouhi mentioned that “[Aramco] steadily grew at a pace relevant to its era.” Whether that was gas commercialization in the 1980s or the Accelerated Transformation Program (ATP) in 2010, Aramco has always strived to not only keep up with, but rather set the pace of the energy industry; a strong characteristic that has only reinforced the company’s public value.
Looking at the state of Aramco in 2024, half a decade since its initial listing on the public market, the company has continued to flourish and evolve in numerous avenues. From venturing into new verticals such as renewables (New Energies) and digital technologies (Aramco Digital), to penetrating existing markets overseas with retail businesses in South America and Pakistan, or the countless collaborations and integrations, such as with Al-Qadsiah FC and Saudi Basic Industries Corporation (SABIC), it remains clear that the company has a prosperous and diversified future ahead of it.
The resounding bells of success of Aramco’s IPO launch still ring just as loud today as they did in 2019, thanks to extensive efforts during the IPO preparations. While Mr. Al-Sayouhi attributes the company’s ever-growing success to its resilience, he also mentions that its prominent position comes from its outstanding community and the foundation they have set for future generations: a tradition that will undoubtedly carry on with today’s young professionals.
The opinions, views, and statements expressed in this article are presented solely for informational purposes and do not necessarily represent the official positions, policies, or endorsements of Aramco or any other entity mentioned therein.