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 10, sources confirmed to Al Arabiya earlier.
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. Even at the lower-end of this spectrum, the overall 5 percent listing of Aramco will dwarf any other IPO in history.
At a $2 trillion valuation the company would raise $100 billion for a 5 percent stake. 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 company will float 2 percent on the Saudi market as part of its first phase in going public, according to Al Arabiya sources.
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.
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.SHOW MORE