Saudi Aramco to release IPO prospectus on November 10: Sources

Fatima Daoui, Reem Abdellatif, Al Arabiya English

Saudi Aramco will release the prospectus for its initial public offering (IPO) on November 10, sources told Al Arabiya on Sunday.

Later on Sunday, Saudi Aramco announced its intention to proceed with an initial public offering on the Saudi stock market of Tadawul.

Earlier, Saudi Arabia’s Capital Market Authority (CMA), the Kingdom’s market regulator, said it issued a resolution approving Saudi Aramco’s IPO.

The purpose of the IPO, potentially the biggest ever, is to put Saudi Arabia on the fast track to diversifying its economy away from oil and transforming key sectors including mining, healthcare, and tourism in line with its Vision 2030 program.

Saudi Arabia's Crown Prince Mohammed bin Salman told Al Arabiya in 2017 that it could take the Kingdom 40-50 years to develop areas such as the mining sector without the IPO.

Saudi Aramco is aiming to list a total of 5 percent to raise $100 billion at a $2 trillion valuation. The company is expected to list a 1 percent stake on Tadawul before 2019 end and another 1 percent in 2020, which will be followed up by an international offering in 2020 or 2021.

The company, which plans to pay a base dividend of $75 billion in 2020, reported a profit of $111.1 billion in 2018 and $46.9 billion in the first half of 2019.

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.