Aramco prospectus flags risks, few details on IPO size

DUBAI — Saudi state oil giant Aramco will sell up to 0.5% of its shares to individual retail investors and will be restricted from issuing additional shares for a year after the initial public offering (IPO), its prospectus said on Saturday.

Aramco fired the starting gun on what is likely be the world’s largest listing on Nov. 3 after a series of delays. The offering, set to rank it as the world’s most valuable company, will begin on Nov. 17, the prospectus said.

Crown Prince Mohammed bin Salman is seeking to sell the shares to raise billions of dollars to diversify the Saudi economy away from oil by investing in non-energy industries.

Bankers think the long-awaited IPO will value Aramco around $1.5 trillion.

The more than 600-page prospectus published on Saturday did not include details of how much of the company would be floated in total or of any commitments from cornerstone investors.

Sources have said the company could sell 1%-2% on the Saudi stock market. If the government sells 2% of Aramco shares, the retail offering could account for 25% or $10 billion of the deal size at the top valuation of $2 trillion.

The prospectus, which revealed few details, did not say how the government will use the proceeds from the sale.

The prospectus said that among the risks for investors were the potential for terrorist attacks and the potential for encountering antitrust legislation, as well as the right of the Saudi government to decide maximum crude output and direct Aramco to undertake projects outside its core business.

Aramco may also change its dividend policy without prior notice to its minority shareholders, it said.

“Apart from the oil price, of course, the main risks are the degree to which Aramco needs to shoulder the burden of OPEC Plus output restraint, allocation of capital into projects which maximize value for Saudi overall as opposed to Aramco minority shareholders, physical security risks and the dividend payout ratio in the longterm,” said Hasnain Malik, head of equity strategy at Tellimer. —