Saudi Aramco set for world’s biggest float
1933 Year the company that became Aramco was founded £1.5trillion What Saudi officials hope Aramco is worth £1trillion What analysts think the company is worth £31bn Sum it could raise through the float 257bn Estimated reserves in barrels at the end of 2018 52 years How long these reserves may last
sauDI arabia has fired the starting gun on what will be the world’s biggest float after receiving a thumbsup from regulators.
analysts believe the listing of saudi aramco could value the state-owned energy firm at £1trillion – though Crown Prince Mohammed bin salman (pictured) is hoping it could be worth £1.5trillion.
The company pumps out one in eight barrels of oil globally and made a profit of £36bn in the first six months of this year.
The country’s Capital Markets authority yesterday granted aramco permission to sell a portion of its shares on the local Tadawul exchange – three years after plans for the float were first announced.
But detail was scant on key issues. aramco has not released a timetable for the float or even said how much of the company it will put on the public markets.
analysts expect it will make its stock market debut in midDecember and will put between 1pc and 2pc of the company’s shares up for sale. This could raise around £31bn. However, the company did reveal plans to hand back £58bn a year to investors in a generous dividend policy and has built in bonus share schemes for locals in an effort to encourage ordinary saudis to invest.
aramco’s float is at the heart of the Crown Prince’s grand strategy of modernising the country and weaning it off its dependence on gas and oil, called Vision 2030.
This includes building tourist resorts, theme parks and more sustainable electricity schemes.
aramco’s chairman, Yasir alrumayyan, said: ‘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.’
The original aim of listing on a foreign stock exchange at the same time as the local float has been shelved – at least for now.
When aramco first revealed its plans in 2016, it estimated it would release 5pc of the statebacked giant’s shares between the Tadawul and another international bourse.
This kicked off a campaign by stock exchanges in London, New York, Hong kong and elsewhere to woo the authorities in riyadh.
It was also met with great curiosity because it offered a rare opportunity to look inside the books of the world’s biggest – and most secretive – oil company.
although the float was expected in 2018, it was pushed back following doubts that it would be able to secure the coveted £1.5trillion valuation.
aramco officials will now go on a bumper investor roadshow, which will involve gauging demand from potential shareholders and finding out how much they would be prepared to pay for its stock.