Aramco won’t sell its shares directly to investors in the U.S. and other markets, as the IPO will be restricted to Saudis and those foreign institutions permitted to invest in the kingdom’s stock market.
Saudi Arabia has set a price range for the listing of its state-owned oil company Saudi Aramco at US$1.6 - 1.7 trillion, making it potentially the world's biggest initial public offering.
The oil giant said it plans to sell 1.5 percent of the company, or about three billion shares, at an indicative price range of 30 riyals to 32 riyals, valuing the IPO at as much as 96 billion riyals (US$25.6 billion) and giving the company a potential market value of around US$1.7 trillion.
The listing is below the two trillion dollars the Saudi Arabian Crown Prince Mohammed bin Salman, who floated the idea nearly four years ago, had targeted but still could just beat Chinese e-commerce giant Alibaba’s record US$25 billion New York stock market debut in 2014.
Aramco won’t sell its shares directly to investors in the United States and other markets, as the IPO will be restricted to Saudis and those foreign institutions permitted to invest in the kingdom’s stock market.
“We are planning to subscribe to the IPO in two funds that we manage,” said Zachary Cefaratti, chief executive officer of Dubai-based Dalma Capital Management Ltd, adding that the preliminary valuation was “in line with our expectations”.
Aramco is yet to name any cornerstone investors in the deal or formally disclose the listing date.
Confirmation of the sale of shares in the oil giant, whose formal name is Saudi Arabian Oil Co, comes about nine weeks after the 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, which targeted plants at the heart of Saudi Arabia's oil industry and initially halved its production, would have a material impact on its business, operations and financial condition.
Aramco accounted for about one in every eight barrels of crude oil produced globally from 2016 to 2018.
Its net income for the third quarter of 2019 amounted to US$21.1 billion, according to Reuters calculations, dwarfing the income for the same period of oil giants like Exxon Mobil Corp, which was just over US$3 billion.