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Report: Saudi Aramco restructures nonoil assets for IPO

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Report: Saudi Aramco restructures nonoil assets for IPO

Saudi Arabian Oil Co. restructured some of its nonoil assets and may spin off its aviation division ahead of its IPO to streamline the state-owned petroleum giant's operations and allow for an easier valuation, sources told Reuters.

Aramco created a new subsidiary for its in-house retirement fund management unit about six months ago, sources familiar with the matter said. Now called Wisayah, the fund caters to the company's roughly 55,000 employees and their families. The company also runs its own schools, housing, hospitals and air fleet.

The move could make the company easier to value by clarifying the risks it faces, financial and industry sources said, with one saying, "This makes Aramco a leaner company."

Potential investors in what is expected to the biggest IPO ever may not want exposure to such a complicated array of assets that would not be as profitable as Aramco's core oil business, financial sources reportedly said.

Aramco is also considering a spinoff of some of its nonoil units, such as its aviation division, either by forming a joint venture or having an outside company operate the division, two sources said.

The company created a joint venture with the U.S. construction firm Jacobs Engineering Group last year, and its Johns Hopkins Aramco Healthcare Co. was formed in 2013 with the U.S. hospital to provide medical care for Aramco employees and their families.

The oil company reportedly delayed its IPO to the first half of 2019. It was previously reported to take place in 2018. Aramco plans to sell a 5% stake and is looking for a $2 trillion valuation. Markets in London, New York and Hong Kong were shortlisted for the share sale.