Business

Saudi Aramco goes ahead with IPO

The oil giant could raise as much as $27billion to $54billion

DUBAI/DHAHRAN, SAUDI ARABIA Saudi Arabia's state oil company kick-started its initial public offering (IPO) yesterday, announcing its intention to list on the domestic bourse as the kingdom seeks to diversify and create the world's most valuable listed company.

Saudi Aramco did not give a time frame or say how much of the company it would sell, but sources have told Reuters the oil company could offer 1 per cent to 2 per cent of its shares on the local bourse, raising as much as US$20 billion to US$40 billion (S$27 billion to S$54 billion).

Aramco said the IPO would be split into two tranches: One each for institutional and individual investors. The percentage of shares to be sold and the purchase price would be determined after the book-building period, it added in a statement.

Confirmation of the share sale in Saudi Arabian Oil Co, or Aramco, as the oil giant is usually known, comes about seven weeks after crippling attacks on its oil facilities, underlining Saudi Arabia's determination to push on with the listing regardless.

Aramco said it does not expect the Sept 14 attack on its oil plants will have a material impact on its business, operations and financial condition.

The IPO of the world's most profitable company is designed to turbocharge Crown Prince Mohammed bin Salman's reform agenda by raising billions to diversify the economy of the kingdom, whose dependency on oil was highlighted by the production impact of the September attacks.

"It is a colossal public offering that could potentially generate more than 10 years' worth of proceeds raised through IPOs in the country," said Mr Salah Shamma, head of investment, MENA, Franklin Templeton Emerging Markets Equity.

Aramco plans to release the IPO prospectus on Nov 9, chief executive Amin Nasser told a news conference in Dhahran, Saudi Arabia.

Aramco chairman Yasir al-Rumayyan told the news conference that the valuation for the company should be determined after the roadshow.

At a valuation of US$1.5 trillion, Aramco would still be worth at least 50 per cent more than the world's most valuable companies, Microsoft and Apple, which each have a market capitalisation of about US$1 trillion.

But a 1 per cent sale would raise "only" around US$15 billion for Saudi coffers, less than the US$25 billion generated by Chinese e-commerce giant Alibaba in its record-breaking IPO in 2014.

It would rank Aramco as the 11th biggest IPO of all time, Refinitiv data shows. - REUTERS

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