Saudi Aramco announces its long-awaited IPO

Pedro Gonçalves
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Saudi Aramco announces its long-awaited IPO

Saudi Aramco, the world's most profitable company has announced a long-awaited IPO on the Riyadh stock exchange as the kingdom hopes to achieve a $2trn valuation.

Trading is expected to begin in December with reportedly somewhere between 2% and 5% of its shares being listed. The fact that it will be listed on the Tadawul, Saudi Arabia's domestic market is a blow to London, Hong Kong and New York who were all competing for the international stock market listing.

The kingdom's market regulator approved the listing early Sunday but exact details surrounding the size and scope of the IPO remain unknown. In a statement from Saudi Aramco, the company said "the final offer price, number of shares to be sold and percentage of the shares to be sold will be determined at the end of the book-building period."

The final offer price, number of shares to be sold and percentage of the shares to be sold will be determined at the end of the book-building period"

The Saudi government has already conceded the company probably is not worth the $2trn valuation crown prince Mohammed Bin Salman has long advocated.

Goldman Sachs told investors Aramco is worth between $1.6trn and $2.3trn. Bank of America had the bottom of its range at just $1.2trn. BNP gave an estimate of $1.42trn, two fund managers who have seen the research reports told Reuters.

Amin Nasser, president and chief executive of Saudi Aramco, said in a statement that the company's vision "is to be the world's pre-eminent integrated energy and chemicals company."

"Our mission is to provide our shareholders with long-term value creation through crude oil price cycles by maintaining our pre-eminence in oil and gas production, capturing additional value across the hydrocarbon value chain and profitably growing our portfolio," he said.

Nasser added that the company's IPO prospectus would be released on November 9.

Saudi Aramco reported $111bn in net income in 2018. Until now, the world's biggest IPO has been that of Chinese ecommerce company Alibaba in 2014, which raised $25bn.

 

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