Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Saudi Aramco flotation values oil giant at $1.7tn

Saudi Arabia has placed a preliminary valuation on state oil company Aramco of between $1.6tn (£1.22tn) and $1.7tn.

The company has published an updated prospectus for its initial public offering (IPO), seeking more than $25bn for the sale of 1.5% of its shares.

That would make it potentially the world's biggest IPO, coming from the world's most profitable company

It is short of the $2tn valuation that Crown Prince Mohammed bin Salman was reportedly keen to achieve.

"The base offer size will be 1.5% of the company's outstanding shares," the state-owned energy giant said in a statement that set the price range at 30-32 Saudi riyals per share ($8-$8.5).

That could value the IPO at as much as 96bn riyals ($25.60bn) at the top end of the range.

If priced at the top end, the deal could just beat the record-breaking $25bn raised by Chinese e-commerce giant Alibaba in 2014.

Individual retail investors, as well as big institutions, will have a chance to buy shares.

Aramco had initially been expected to sell some 5% of its shares on two exchanges, with a first listing of 2% on the kingdom's Tadawul bourse, and then another 3% on an overseas exchange.

The firm says there are now no current plans for an international sale, with that long-discussed goal now seemingly being put on ice.

The crown prince 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

Analysts S&P Global Ratings said the stock market debut could enable Saudi Arabia to strengthen its financial position.

"If subsequently effectively deployed, the funds raised could be used to support longer-term economic growth in Saudi Arabia," it said.

In its prospectus released last week, the company lists a variety of investment risks ranging from terrorist attacks to geopolitical tensions in a region dominated by Saudi-Iran rivalry.

The 600-page prospectus also includes the government's control over oil output as another potential risk.

After the flotation, Aramco will not list any more shares for six months, the prospectus says. Although one of the attractions for investors is the potential of high dividends, the document said Aramco has the right to change dividend policy without prior notice.

Aramco has hired a host of international banking giants including Citibank, Credit Suisse and HSBC as financial advisers to assess interest in the share sale and set a price. Based on the level of interest.

The sale of the company, first mooted four years ago, has been overshadowed by delays and criticism of corporate transparency at Saudi Arabia's crown jewel.

Aramco last year posted $111bn in net profit. In the first nine months of this year, its net profit dropped 18% to $68bn.

A third of Aramco's shares - about $8bn worth - will be sold to the man and (the prospectus says) even the divorced woman on the street, giving local Saudi Arabians a stake in their nation's cash cow for the first time.

A TV and billboard advertising campaign, as well as social media, is stoking enthusiasm on the ground and demand is expected to be high. For the remaining $16bn, the oil giant is turning to institutional investors.

And a source close to the company says there has been sufficient interest that they're confident they can cover most of this off within the Gulf. But there will be disappointment amongst officials if global demand is not there for the jewel in Saudi Arabia's crown.

A fossil fuels company owned by an absolute monarchy in a volatile region are not an easy sell for many Western firms, pursuing the latest trend in investment policy of "ESG" (Environmental, Social and Governance) criteria.

Norway's sovereign wealth fund is among those to already rule themselves out from investing.

But the promise of sharing the promised annual $75bn cash dividend pot might be too good for some to miss, according to James Bevan, Chief Investment Officer at CCLA Investment Management (one of the UK's largest charity fund managers).

Given his firm's focus, he is not looking to invest in the shares but explains why some are. "It's a 'risk' in the eyes of some investors to be very underweight in oil and gas, and Aramco may be a means of plugging a sector gap with perhaps less worry than associated with holding Gazprom," he says.

Investors follow indixes - such as the FTSE 100 - which are made up of array of types of industries and so some feel oil and gas needs to be correspondingly represented in their portfolio.

As Aramco's big sales pitch road show kicks off, the real test of investor appetite for the company will begin.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
×