Saudi Aramco short of $2trn valuation in new IPO range

Pedro Gonçalves
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Saudi Aramco short of $2trn valuation in new IPO range

Saudi Arabia has scaled back the initial public offering of its state oil company after international investors gave its ambitious plans a lukewarm response.

Saudi Aramco could be valued at up to $1.7trn, according to a price range announced for its upcoming listing. The state-owned oil and gas firm had been expected to seek $2trn market value through the listing.

That was a sum sought by the Gulf state's crown prince, Mohammed bin Salman.

Saudi Aramco is targeting a price range of 30 to 32 Saudi riyals, or around $8.00, per share, putting the valuation of $1.6trn to $1.7trn, which would still make it the world's largest publicly traded company by market capitalisation - a record currently held by Apple.

Market analysts had been expecting at least 2% of the company to be put up for sale. 

Under the IPO's targets, between $24bn and $25.6bn will be raised as the Saudi government moves to diversify from its reliance on oil to seek revenues from other channels.

Saudi Arabian officials have told bankers they are unhappy with the level of foreign demand for Saudi Aramco, the FT reported.

Saudi officials have made recent trips to China and Russia in an attempt to shore up demand from state-owned funds, which they believe would help close the gap. Saudi pension funds, as well as other sovereign funds, are also expected to buy into the offering.

The Saudi central bank also relaxed lending limits to boost demand from local investors after bankers were unable to convince many international money managers of the merits of the deal.

Speculation and delayed announcements on the public listing of the world's most profitable company have riveted investors and market watchers since plans for the float were first disclosed three years ago.

Aramco, the world's most profitable company with $111bn in 2018 net income, is expected to begin publicly trading next month on the Tadawul, Saudi's stock exchange.

 

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