State-owned Saudi Aramco, the world’s largest oil company, started an initial public offering three years after a listing was first flagged
DHAHRAN, Saudi Arabia/DUBAI - Saudi Arabia’s giant state oil company finally kick-started its initial public offering on Sunday, announcing its intention to float on the domestic bourse in what could be the world’s biggest listing as the kingdom seeks to diversify its economy away from oil.
Sources have told Reuters the oil company could offer 1%-2% of its shares on the local bourse, raising as much as $20 billion-$40 billion. A deal over $25 billion would top the record-breaking one of Chinese e-commerce giant Alibaba in 2014. Rumayyan said a decision on an international listing for Aramco shares will be made in the future, without giving a time frame or venue for the overseas listing.
Aramco accounted for about one in every eight barrels of crude oil produced globally from 2016 to 2018, it said on Sunday. “Whatever this local round achieves, with domestic players being strong armed into investing, international investors are still going to value this well below the expectations of Mohammed bin Salman,” said Rory Fyfe, managing director at Mena Advisors.The Saudi stock market fell 2% on Sunday after the Aramco announcement. The benchmark index .TASI is down nearly a fifth since May as local institutions sold shares to prepare for the Aramco deal, fund managers and analysts say.
Saudi investors would be eligible to receive bonus shares - a maximum of 100 bonus shares for every 10 allotted shares. Aramco mandated 27 banks to work on the deal including Citigroup, Goldman Sachs, HSBC, JPMorgan and Morgan Stanley. IPO preparations were revived this summer after Aramco attracted huge interest in its first international bond sale, seen as a pre-IPO relationship-building exercise with investors.
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