International Finance
Investment and funding

Temasek to pull out from Saudi Aramco IPO investment

Temasek Aramco investment
The withdrawal is attributed to environmental concerns that do not align with Temasek’s ESG assessments

Singapore’s Temasek has cancelled its investment plan in Saudi Aramco’s initial public offering on the basis of environmental concerns.

Temasek’s long-term focus on environmental goals has forced it to pull out from its investment plan in Aramco. Temasek has outlined a goal to reduce carbon emissions from its portfolio companies by 50 percent by 2030.

It has identified that environmental, social and governance (ESG) assessments are an important factor in its long-term vision. Therefore, its decision-making is aligned with ESG assessments coupled with commercial considerations.

It seems that several mature market funds are careful about investments that contribute to climate change and support fossil fuel growth. “I don’t think we’re going to be investing in fossil fuels,” Temasek International chief executive officer Dilhan Pillay told the media.

As of March 31, Temasek had a net portfolio worth $227 billion.

Saudi Aramco’s IPO is anticipated to mark the world’s biggest on record. It aims to sell two percent of the company which is estimated to raise $40 billion, the media reported. Aramco is targeting a valuation of at least $2 trillion, which is more than Apple.

The funds from the sale of Aramco’s two percent shares will be used to diversify and venture into non-oil sectors.

Recent reports said that Aramco’s board might give final approvals to proceed with the share sale next week.

Aramco is ramping up efforts for its IPO and will be listing on the Tadawul exchange in Riyadh. That said, an international listing could take place in Tokyo in 2020 or 2021.

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