Saudi Aramco chairman says IPO investment will come from ‘anywhere in the world’

Reem Abdellatif, John Benny, Al Arabiya English

Saudi Aramco, the world’s largest oil exporter, said on Sunday that the company will launch its initial public offering (IPO) on the Saudi Stock Exchange (Tadawul).

Chairman of Saudi Aramco and Governor of the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, Yassir al-Rumayyan told Al Arabiya in an exclusive interview that investments in Aramco’s IPO are expected to come from anywhere in the world.

“I am honored to announce that Saudi Aramco will become a listed company on the Saudi Stock Exchange,” al-Rumayyan said.

“To strengthen the Tadawul, and Saudi Arabia as a foreign investment destination, listing Saudi Aramco now is important,” Saudi Aramco CEO Amin Nasser said on Sunday at a conference.

The IPO prospectus will be issued November 9, according to Aramco officials.

The price range of Saudi Aramco IPO will be out in two weeks, al-Rumayyan added, confirming a timeline published by Al Arabiya English during the Future Investment Intiative (FII) conference held in Riyadh last week.

Authorities have openly targeted a $2 trillion valuation, but some analysts and investment banks have predicted a range of $1.2 to $1.5 trillion.

The company will float 2 percent on the Saudi market as part of its first phase in going public, sources told Al Arabiya.

Aramco was previously expected to list a 1 percent stake on Tadawul in 2019 and another 1 percent in 2020, before an international offering in 2020 or 2021.

Al-Rumayyan declined to comment on the company’s valuation on Sunday, but said that the percentages of listing domestic, as well as international, have yet to be determined.

 

The purpose of the IPO 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.

“If [Aramco] is listed it does put Tadawul on the radar for a lot of investors because here you have one of the biggest companies in the world, it’s strong with solid profitability, strong cash flow, and a massive downstream product – especially with the acquisition of SABIC,” said Head of Research at Aljazira Capital Talha Nazar.

“It’s only Tadawul for now, anything else in the future will be announced at a later date,” Nasser said, referring to the company’s plans for a foreign listing. He also added that Aramco did not just meet with international investors but “with national investors also.”

“We will continue to create value, for our shareholders, for our customers,” he said.

On the subject of Aramco’s purchase of Saudi Arabian Basic Industries Corp (SABIC) Nasser said that the payments will be done in gradual stages and based on the company’s profits.

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.

Results

Separately, Saudi Aramco reported a net income of $68 billion for the nine months ended September 30. The company’s revenues and other income related to sales stood at $244 billion for the same period.

Saudi Aramco also announced that Saudi Arabian retail investors that hold their shares for a minimum of 180 days, or six months, would be eligible for a 10 percent discount through the allocation of additional bonus shares.

“What [the bonus share scheme] will do is stop any retail investor that was trying to make a quick return on the stock in the market. I think it will stop that and give a level of price stability to the stock,” added Nazar.

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. It is the most profitable company in the world, ahead of Apple Inc.

Matthew Amlôt, Al Arabiya English, contributed to this article.

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.