Saudi Arabia kicks off Saudi Aramco's IPO, the world's biggest

The world's most profitable company pays surprisingly little

Saudi oil giant Aramco gets go ahead for $1.7 trillion stock listing

Saudi-owned channel Al-Arabiya announced last week that stock pricing will begin November 17, with a final stock price to be set in early December.

The market launch of the world's most worthwhile firm types the linchpin of Prince Mohammed's bold plans to overtake the oil-reliant financial system, with tens of billions of wanted to fund megaprojects and new industries.

January 24, 2016 Saudi Aramco chairman said IPO could be open to worldwide markets, in interview to Arabiya TV.

Saudi Arabia is aiming for a valuation of between $1.6 trillion and $1.8 trillion, according to people familiar with the matter.

"It's essentially the world's largest unquoted company; it's a massive global oil producer", said David Hunter, director of market studies at Schneider Electric.

With Aramco likely to list 5% of the company over time (1% locally and 4% on an exchange abroad) at a hypothetical US$1.5-US$2 trillion valuation, the offering could add up to 1.8% to its MSCI Emerging Markets Index representation.

Following approval from the country's regulators, Saudi Aramco on Sunday formally announced its intention to float shares on the Tadawul exchange in Riyadh.

The IPO of the world's most profitable company is created to turbocharge Crown Prince Mohammed bin Salman's economic reform agenda by raising billions to diversify the kingdom, whose dependency on oil was highlighted by the production impact of the September attacks.

Last week, Energy Intelligence cited sources as saying they expect the Saudis to settle on a valuation of $1.6 trillion to $1.7 trillion.

To comfort investors, Aramco said on Sunday the state will forgo its right to receive a portion of cash dividends on shares, giving priority to new shareholders.

Market experts say it is part of efforts to bolster its network in the Middle East via an investment in Saudi Arabia's major corporate names.

"Listing on the domestic market without firm plans to list internationally is risky for the Saudi stock market", Ellen Wald, author of the book "Saudi Inc.", told AFP. Saudi nationals will also be entitled to one bonus share, up to a cap of 100 bonus shares, for every 10 allotted shares.

The crown prince promotes it as a way to raise funds for the sovereign wealth fund of the kingdom, which will be used for projects to boost employment and develop new cities such as NEOM, a futuristic megacity of $ 500 billion planned on the north coast of the Red Sea, which authorities say they will have flying taxis and talking robots.

From the 1990s, Aramco invested hundreds of billions of dollars in massive expansion projects, raising its oil output capacity to over 12 million barrels per day, alongside making bold worldwide acquisitions and pursuing joint ventures.

But recently, there have been decisions seemingly forced onto Aramco, including the almost $70 billion purchase in March of the petrochemical firm Saudi Basic Industries Corp. just before SABIC announced a plunge in its quarterly profits.

A sale of 2% of Aramco shares at a $1.5 trillion valuation would make it the biggest IPO of all time, beating Alibaba's.

"It allows Prince Mohammed to show he keeps his promises and gets things done, another step to reassure worldwide investors that the IPO will happen after all", Bianco said.

The Riyadh bourse said it was ready and able to deal with such a huge share offering.

The company's net income in 2018 was $ 111.1 billion, well beyond the combined net income of the oil giants BP PLC, Chevron Corp, Exxon Mobil Corp, Royal Dutch Shell PLC and Total SA.

Aramco said on Sunday it meant to declare aggregate ordinary cash dividends of at least $108.5 billion in 2020.

Latest News