Business

Saudi Aramco’s IPO set to value it at $2.3 trillion

Price range for its listing indicates oil giant is worth $2.3 trillion

DUBAI Saudi Aramco has set a price range for its listing that implies the oil giant is worth between US$1.6 trillion (S$2.2 trillion) and US$1.7 trillion (S$2.3 trillion).

Although below the US$2 trillion the Saudi Crown Prince had previously targeted, it could still be potentially the world's biggest initial public offering (IPO).

Aramco said yesterday it plans to sell 1.5 per cent of its shares or about three billion shares, at an indicative price range of 30 riyals (S$11) to 32 riyals, valuing the IPO, as much as 96 billion riyals at the top end of the range.

If priced at the top, the deal could just beat the record-breaking US$25 billion raised by Chinese e-commerce giant Alibaba in its stock market debut in New York in 2014.

Aramco's float is the centrepiece of Crown Prince Mohammed bin Salman's plan to diversify the world's top crude exporter away from oil.

Aramco does not plan to market its domestic IPO abroad, three people familiar with the matter said, which suggests international roadshows will not take place.

"This will put the burden of the deal on local and regional banks," one of the three people said.

"This means most of the investors will participate as Qualified Foreign Investors in a Saudi transaction," another one of the people said.

Aramco finally kicked off its IPO on Nov 3 after a series of false starts.

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Prince Mohammed, who had floated the idea of the listing four years ago, is seeking to raise billions of dollars through the deal to invest in non-oil industries and create employment.

But the investment world is still trying to decide what the famously secretive company is worth. Analysts from banks working on the Riyadh bourse had projected a wide valuation range for Aramco of between US$1.2 trillion and US$2.3 trillion.

Aramco is the world's most profitable company, with a planned dividend of US$75 billion next year, more than five times larger than Apple's payout, which is already the biggest of any S&P 500 company.

But it is a bet on the price of oil at a time when global demand is expected to slow from 2025 as measures to cut greenhouse gas emissions are rolled out and the use of electric vehicles increases. - REUTERS

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