UNITED STATES (OBSERVATORY NEWS) — Saudi Aramco set November 17 as the date to start buying shares without announcing the share price, the actual start date, or even the total offering.
The company said in the IPO prospectus midnight on Saturday that the final offer price will be announced on December 5 “through local and international media and through its website.”
After years of delays, Aramco officially decided on Sunday to list part of its shares in the local market, shortly after the Saudi Capital Market Authority approved the shares.
The world’s most profitable company, which pumps about 10 percent of the world’s oil per day, will give individual investors 0.5 percent of the total, which has yet to be determined, the prospectus said.
It aims to “allocate a maximum number of IPOs equal to 0.5 percent – of the total shares of the company to the individual underwriting segment,” it said.
In terms of institutions and companies, Aramco said that “the number and percentage of shares offered (…) will be determined in consultation with financial advisors and key coordinators.”
The subscription period for the corporate and institutional underwriters starts on November 17 and lasts until December 4, while the subscription period for individuals is between 17 and 28 this month.
– Risks –
Aramco has addressed a number of risks, including the possibility of terrorist attacks, the adoption of new laws and the consequences of climate change that may reduce oil demand.
Still, the Saudis seem eager to buy a stake in the company, which is seen as the backbone of the economy and social stability of the wealthy state.
This could be the largest IPO in history after Aramco’s final valuation and share price in the coming weeks. Alibaba Group’s largest IPO in history is worth $ 25 billion.
A number of major international banks, including Citibank and HSBC, will provide financial advice.
Saudi Arabia is working hard to make the IPO a cornerstone of the crown prince’s 2030 economic reform program. Officials are seeking tens of billions of dollars to fund large-scale projects under this ambitious program.
According to press reports, the authorities tried to stimulate the local market to subscribe to the company before the IPO by inviting wealthy families to buy stakes, while local media promoted the purchase as a national business.
But the company, which was founded in 1933, has in parallel faced doubts by international investors in London and New York about the transparency governing the company and management, sources told AFP.
The IPO was announced after nearly six weeks of missile and drones attacks on the company and was adopted by Yemeni Houthi rebels, but the United States has accused Iran of being behind it.
However, China could invest about $ 10 billion, according to Bloomberg.
In announcing the IPO a week ago, the company said there was no current intention to go on a foreign market.
But sources familiar with the dossier told AFP earlier this month that Aramco plans to float 2 percent of the shares on the Tadawul market in Saudi Arabia before proceeding to an IPO of 3 percent.
– Stay tuned for evaluation –
Trading in the domestic financial market is expected to begin in the middle of next month.
The IPO was repeatedly delayed because the company’s valuation, according to bankers’ calculations after meetings with potential investors, was well below the $ 2 trillion sought by Saudi Crown Prince Mohammed bin Salman, according to sources familiar with the file.
The small percentage of the oil giant will be offered on the basis of an assessment of the company between $ 1.5 and $ 1.7 trillion, according to the same sources. If these figures are confirmed, the crown prince has retreated from the limit he has demanded since 2016.
Aramco is seen as the mainstay of the kingdom’s economy and social stability.
The company this month released results for the first nine months of this year, saying it made a net profit of $ 68 billion.
The giant made a net profit of $ 111 billion last year, surpassing the top five global oil companies, with revenues of $ 356 billion.
Aramco estimates proven oil reserves at 227 billion barrels and hydrocarbon reserves at 257 billion barrels.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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