Saudi Aramco takes unofficial IPO roadshow to Abu Dhabi to lure Gulf investors

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Saudi Aramco continued its unofficial regional roadshow with a visit to Abu Dhabi on Monday as the oil giant meets with investors to discuss its overall strategy, dividend plans, and company vision.

Aramco’s Chief Financial Officer Khalid al-Dabbagh is leading the briefings to attract investors for its upcoming initial public offering (IPO) on the Saudi Stock Exchange (Tadawul). The company’s executives first met investors in Dubai and are now continuing talks in the Emirati capital Abu Dhabi – the Middle East region’s wealthiest city.

The Aramco IPO briefings in the UAE are meant to drum up support for the listing across the Arabian Gulf after the company abandoned plans for an international roadshow, saying in its updated IPO prospectus on November 17 that the listing will focus on retail investors and qualified foreign investors (QFIs) in Saudi Arabia.

As an alternative, Saudi Aramco is targeting local and regional investors to garner support for the IPO.

“The valuation that they wanted to come in with is not attracted to foreign investors,” one banker told Al Arabiya English, in reference to the $2 trillion valuation that the company was targeting before the IPO preparations were launched.

Aramco is offering 1.5 percent of its shares on the Tadawul exchange. Retail investors will be able to subscribe to 0.5 percent of this amount, while the remaining 1 percent is allocated to institutional investors, such as banks or sovereign wealth funds.

The initial offering price for the IPO has been set at 30-32 riyals ($8-$8.53). This share price would value the oil giant at $1.6 trillion to $1.7 trillion. The final price set to be announced on December 5.

Saudi Aramco’s IPO has so far received about 73 billion riyals ($19.47 billion) in orders, Riyadh-based Samba Financial Group, one of the managers of the IPO, confirmed to Al Arabiya English on November 21.

Lending limits in the Kingdom were doubled for Saudi Arabian retail investors looking to invest in Aramco’s equity. The Saudi Arabian Monetary Agency (SAMA), the Kingdom’s central bank, is also monitoring lending on a daily basis in order to ensure that regulations are met, and that local lenders are not over leveraging, another banker told Al Arabiya English.

Once listed, Aramco is expected to compose 9.1 – 9.7 percent of the Tadawul All Share Index (TASI), the Saudi benchmark index, based on the announced share price of SAR 30-32, according to Riyadh-based Al Rajhi Capital.

Meanwhile, on Sunday, Khalid al-Hussan, chief executive officer of the Tadawul exchange, told local media that the oil giant’s weight on the index is “unlikely” to breach the maximum limit set by the market, adding that the maximum level that the company can reach is 15 percent.

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