Saudi oil giant Aramco heads for record-setting market debut
Foreign float on hold • IPO plans to create world’s most valuable listed company
DHAHRAN: Saudi Arabia announced yesterday the stock market debut of energy giant Aramco in what could be the world’s biggest IPO, underpinning Crown Prince Mohammed bin Salman’s ambitions to overhaul the kingdom’s oil-reliant economy. After years of delay, Aramco said it plans to sell an unspecified number of shares on the Riyadh stock exchange, calling it a “historic” milestone for the world’s most profitable company which pumps 10 percent of the world’s oil.
However, the state firm said there were no current plans for an international listing, indicating that the long-discussed goal for a second offering on a foreign bourse had been put aside. The launch, which has been approved by regulators, forms the linchpin of Prince Mohammed’s ambitious plans to transform the petro-state, with tens of billions of dollars needed to fund megaprojects and new industries.
With analysts saying that Aramco could be valued at up to $1.7 trillion, the initial public offering (IPO) is potentially the world’s biggest, depending on how much of the company it decides to sell. “Today marks a significant milestone in the history of the company and important progress towards delivering Saudi Vision 2030, the kingdom’s blueprint for sustained economic diversification and growth,” Aramco chairman Yasir AlRumayyan said. The final offer price and the number of shares to be sold “will be determined at the end of the book-building period”, said the firm headquartered in the eastern city of Dhahran.
Aramco had initially been expected to sell a total of five percent on two exchanges, with a first listing of two percent on the Tadawul Saudi bourse followed by a three percent listing on an overseas exchange. “For the (international) listing part, we will let you know in due course. So far it’s only on Tadawul,” Rumayyan said amid reports it was struggling to get institutional investors on board due to questions over transparency and governance.
“An important function of the domestic IPO is to project confidence in the company towards the international market,” said Cinzia
Bianco, Gulf research fellow at the European Council on Foreign Relations. “But doing it domestically encounters no meaningful obstacle. It allows Prince Mohammed to show he keeps his promises and gets things done.”
First suggested by the kingdom’s de facto ruler in 2016, the IPO was delayed several times, reportedly due to his dissatisfaction with the valuation of the firm, which fell short of the hoped-for $2 trillion. Last week, Energy Intelligence cited sources as saying
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