Saudi Aramco's record IPO starts Nov 17, prospectus says

Darnell Taylor
November 10, 2019

Bankers think the long-awaited IPO will value Aramco around $1.5 trillion.

Still, the highly-anticipated sale of even just a sliver of the company is expected to make this the world's biggest initial public offering.

The share offering to individual investors will open on November 17 on the Riyadh stock exchange and close on December 5.

Aramco's oil facilities were targeted on September 14 in unprecedented attacks that temporarily shut 5.7 million barrels per day (bpd) of output - more than 5% of global oil supply.

The document listed a number of risks for prospective investors to consider, including how the company's cash flow is significantly impacted by worldwide crude oil supply and demand and the price at which it is able to sell crude oil.

The prospectus also laid out the main risks in the investment, including terrorism and operational instability.

Aramco has countered the claims with data that a spokesperson said showed that it had the smallest carbon footprint of any of the oil majors per unit of output.

Aramco may also change its dividend policy without prior notice to its minority shareholders, it said.

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Aramco can not list additional shares for a period of six months after trading starts, and will also be restricted from issuing additional shares for 12 months.

"Aramco IPO is an opportunity that shouldnt be missed, the largest company in the world....holding aramco shares is an absolute gain", a Saudi with a twitter handle named Abdulrahman wrote. "The offering is being made available to qualifying individual investors and institutional investors".

Norway's sovereign wealth fund, the largest in the world, has said it does not plan to invest in Aramco, a Norwegian official told AFP.

Saudi Arabia is pulling out all the stops to ensure the success of the IPO, a cornerstone of Prince Mohammed's ambitious plans to steer the economy away from oil by pumping tens of billions of dollars into a host of mega-projects and non-energy industries.

It was initially thought about 5% of Aramco would be sold, but the final figure is now expected to be half that.

Analysts from 16 banks have offered a valuation on the company, ranging in estimates from $1.1 trillion at the bottom right up to $2.5 trillion and the midpoint was $1.75 trillion.

At the top valuation of $2 billion, Aramco could potentially raise $40 billion, topping the record-breaking $25 billion raised by Chinese e-commerce giant Alibaba in 2014.

Aramco and its advisers will use this marketing period to determine the offering's price and issue size based on demand ahead of the company's planned listing on the local Tadawul stock exchange.

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