Saudi Aramco launches what could be world's biggest IPO

November 04, 2019 09:13
Aramco chairman Yasser al-Rumayyan speaks at a news conference in Dhahran on Sunday to announce the start of the Saudi state oil giant’s IPO process. Photo: Reuters

Saudi Aramco kick-started its initial public offering (IPO) on Sunday, announcing its intention to float on the domestic bourse in what could be the world’s biggest listing, Reuters reports.

The Saudi state oil giant, the world's most profitable company, however offered few specifics on the number of shares to be sold, pricing or the date for a launch, the report said..

Bankers have told the Saudi government that investors will likely value the company at around US$1.5 trillion, below the US$2 trillion valuation touted by Saudi Crown Prince Mohammed bin Salman when he first floated the idea of an IPO nearly four years ago.

Aramco also did not mention what measures it has taken to beef up security following unprecedented attacks on its oil plants in September.

Sources have told Reuters the oil company could offer 1-2 percent of its shares on the Saudi bourse, raising anywhere between US$20 billion and US$40 billion.

A deal over US$25 billion would top the record-breaking one of Chinese e-commerce giant Alibaba in 2014.

“Today is the right opportunity for new investors to reap the benefits of Aramco’s ability to achieve value, and boost it on the long-term,” Aramco Chairman Yasir al-Rumayyan told a news conference at the company’s headquarters in Dhahran.

The company will spend the next 10 days talking to investors and sounding out their interest and the price range will follow, he said.

The IPO is designed to turbocharge Prince Mohammed’s ambitious economic reform agenda by raising billions to build non-energy industries and diversify revenue streams.

Rumayyan said a decision on an international listing for Aramco shares will be made in the future. He did not give a time frame or possible venue.

Confirmation of the sale of shares in the oil giant, whose formal name is Saudi Arabian Oil Co, comes about seven weeks after the crippling attacks on its oil facilities, underlining Saudi Arabia’s determination to push on with the listing regardless.

Aramco said it does not expect the Sept. 14 attacks, which targeted plants at the heart of Saudi Arabia’s oil industry and initially halved its production, would have a material impact on its business, operations and financial condition.

Aramco accounted for about one in every eight barrels of crude oil produced globally from 2016 to 2018, it said on Sunday.

Chief Executive Amin Nasser said at the news conference that Aramco plans to release the prospectus on Nov. 9.

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