Saudi Aramco prepares for initial public offering, which is considered as the world’s largest IPO.
Reputed as one of the most profitable companies, it is expected that Saudi Aramco is offering about 5 percent of its shares for the IPO. Big Saudi institutions and business families are also expected to invest in the company.
The attack on Saudi’s Aramco on September 14 has brought down oil output in Saudi Arabia almost by half. This has hurt investor sentiment as the attack highlights the risks involved in its operations.
In the company prospectus, Aramco has highlighted risks involved in investment into the company shares, of which armed conflict and terrorism have received special mention, as a step to maintain transparency. However, the company’s valuation is not mentioned in the prospectus.
The attacks have forced Saudi Arabia to understand the risks involved in sabotage of its oil fields. Crown Prince Mohammed bin Salman, is putting much effort to reduce the dependence of Saudi Arabia on its oil resources by trying to bring in investments in other sectors too. The listing will help to raise its sovereign wealth fund to overhaul the economy towards greater growth.
Saudi Arabia has blamed Iran for the attacks. It is stepping up security on its oil fields to counter further attacks.
The IPO for Aramco will begin on 17 November and will close on 28 November. 10 percent of the global supply of oil is from Saudi Aramco and hence the listing of the company is considered a very crucial one. Its listing will be on the Riyadh Stock Market.
The Crown Prince expects the valuation to be at around $1.6 trillion to $1.8 trillion.
For the first nine months, the net income of Aramco has been at $68.2 billion while it was at $83.1 billion last year. Revenues have gone down to $217 billion from $233 billion last year.