Saudi Aramco has set a price range for its long-anticipated floatation which would value the oil giant at $1.7 trillion (£1.3 trillion), significantly below that sought by Crown Prince Mohammed bin Salman but still making it the world’s most valuable company.
With a 1.5% stake float of around three billion shares, the initial public offering (IPO) could raise as much as $25.5bn.
The would make it the biggest listing in history, but the lower end of the range would be smaller than Chinese e-commerce giant Alibaba’s float in New York in 2014. It could give the world’s top oil producer and most profitable company an implied valuation of $1.5 trillion to $1.7 trillion, leapfrogging Silicon Valley’s tech giants to become the world’s most valuable listed company.
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However, the scale and scope of the listing marks a significant climbdown for the Saudi regime, which is keen to free up some cash as part of its bid to diversify its economy away from oil.
The Daily Telegraph says the prospectus released on Sunday “is an admission of defeat for the Gulf Kingdom and bin Salman, for whom the desired $2bn valuation had been a ‘virility symbol’”.
Aramco had initially been expected to sell some 5% of its shares on two exchanges, with a first listing of 2% on the kingdom's Tadawul bourse, and then another 3% on an overseas exchange.
The company says there are now no current plans for an international sale, with that long-discussed goal now seemingly being put on ice.
With a third of shares to be made available for ordinary Saudis to buy and a massive TV and billboard advertising campaign stoking enthusiasm on the ground “demand is expected to be high”, says BBC business correspondent Katie Prescott.
However, CNN says Aramco “may need to heavily rely on rich local families, sympathetic sovereign wealth funds or major customers such as China signing up for shares”.
Prescott cites a source close to the company as saying “there has been sufficient interest that they're confident they can cover most of this off within the Gulf. But there will be disappointment amongst officials if global demand is not there for the jewel in Saudi Arabia's crown”.
“A fossil fuels company owned by an absolute monarchy in a volatile region are not an easy sell for many Western firms, pursuing the latest trend in investment policy of 'ESG' (Environmental, Social and Governance) criteria,” she says.
“International banks have come under fire from green groups for undermining global efforts to tackle the climate crisis by supporting the Aramco listing,” reports The Guardian, while “investors are also concerned about the company’s close ties to the Saudi state, which has a worrying track record of human rights abuses, and its contribution to the global climate crisis”.
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