Saudi Aramco to announce IPO price range on November 17

Reem Abdellatif, Al Arabiya English

Saudi Aramco’s price range for its initial public offering (IPO) will be determined on November 17, while the announcement of the final offer price will be on December 5, the company confirmed to Al Arabiya English.

The deadline to submit bid forms for institutional investors, such as banks or hedge funds, is set for December 4, while the deadline for retail investors – otherwise known as individual investors – is set for November 28, the company confirmed to Al Arabiya English.

As the energy giant prepares to debut on the Saudi Stock Exchange (Tadawul) on December 11, retail investors will have access to 0.5 percent of the company, or 1 billion shares, according to its prospectus. Aramco is yet to announce the total percentage of the company being listed.

According to a document seen on the Aramco’s official website, Saudi Arabian retail investors that hold their shares for a minimum of 180 days, or six months, will be eligible for a 10 percent discount through the allocation of additional bonus shares.

Sources previously told Al Arabiya that the company will list 2 percent on the Saudi market as part of its first phase in going public.

Saudi Arabia is targeting a $2 trillion valuation for the IPO, while analysts have forecast a valuation between $1.2 trillion to $1.8 trillion.

Global asset management firm Alliance Bernstein, among other banks, has predicted a valuation between $1.2 trillion to $1.5 trillion.

Aramco in its IPO prospectus said that it may pay up to $100 million per year in “services and studies” for Saudi Arabia’s Ministry of Energy, while also flagging possible risks that may impact its financial position and operations, such as oil price fluctuation, geopolitical tensions, and fluctuating supply and demand of hydrocarbons.

 

FAQ's

Saudi Aramco is the Kingdom’s state-owned energy company and the world’s biggest oil producer. In November, the company reported a profit of $68 billion for the first nine months of 2019 – making it the most profitable company in the world.
An initial public offering (IPO) is the process by which a company sells a portion of its ownership (shares) to public investors to raise funds (also known as capital). The company sells its shares by listing them on a public stock exchange, where investors can purchase them.
"I am honored to announce that Saudi Aramco will become a listed company on the Saudi Stock Exchange,” Chairman Yassir al-Rumayyan said in early November. The exact percentage of the company and the possibility of another listing on a foreign exchange are both still unknown details, however.
Senior Saudi Arabian authorities have targeted a $2 trillion valuation. At this valuation, a 5 percent listing would raise $100 billion in funds – dwarfing any other IPO in history. However, some analysts and investment banks have predicted a range closer to between $1.2 and $1.5 trillion.
The IPO prospectus is expected to be released on November 10, with pricing expected November 17. Meanwhile, the float is expected to take place on December 4, followed by trading on December 11.
The IPO is part of Saudi Arabia’s overall strategy to transition into a post-hydrocarbon age. The income generated would be funneled into the Public Investment Fund (PIF), the Kingdom’s sovereign wealth fund (SWF). Saudi Arabia’s Vision 2030 plans to transform the PIF into a giant investment vehicle to help the country diversify its economy and reduce its reliance on oil revenues.
Saudi Vision 2030 is the Kingdom’s ambitious plan to diversify its economy by reducing dependence on oil and developing non-oil sectors ranging from healthcare to mining. The IPO is seen as a cornerstone of Vision 2030, boosting the PIF as the long-term investment vehicle for the Kingdom.

Saudi Arabia’s Crown Prince Mohammed bin Salman

- The Crown Prince is the architect of Vision 2030 and originally announced plans to list shares of Saudi Aramco in 2016.

Prince Abdulaziz bin Salman, Saudi Arabia’s Energy Minister

- Prince Abdulaziz assumed the role of energy minister in September of this year, replacing Khalid al-Falih.

Yasir al-Rumayyan, Chairman, Aramco

- Al-Rumayyan became chairman of Aramco’s board in September. He is best known as governor of the PIF, a role he continues to hold.

Amin Nasser, President and CEO, Aramco

- Nasser has been with Aramco for more than three decades and has held numerous leadership positions.