Saudi Arabia has given the go-ahead to the long-awaited initial public offering (IPO) of Aramco, the national petroleum and natural gas company which is considered the world’s most profitable firm.
Aramco’s IPO, expected to be the biggest flotation in the stock market history, will likely start trading in December.
“The IPO will increase our international visibility as the leading company of the world,” Aramco CEO Amin Nasser said at a press conference.
“I think this is the right time for us,” he said, adding that the percentage of international investors compared with local ones is still to be determined. “If we consider an international listing, it will be in the future.”
Nasser added that Aramco will release a prospectus for the IPO on 9 November, however, he did not elaborate on the valuation.
The long-delayed IPO of the state-owned Saudi oil giant will give a boost to the Crown Prince Mohammed bin Salman’s Vision 2030 economic reform agenda by raising billions of dollars to diversify the kingdom’s economy away from fossil fuels.
In a statement from Saudi Aramco, the company said: “the final offer price, number of shares to be sold, and percentage of the shares to be sold will be determined at the end of the book-building period.”
Aramco was previously estimated at around $2trn, however, various analysts expect the IPO to be lower than this figure, with many expecting it to be no higher than $1.5trn.
Offering 2% only of Aramco would generate more than $40bn, exceeding the record high of $25bn in Alibaba IPO in 2014.
Furthermore, the company announced plans to pay $75bn in dividends next year, aiming to increase the stock attractiveness. At $1.8trn that would mean a yield of 4.4%.
Aramco said on Sunday, that its crude oil production accounted for approximately one in every eight barrels of crude oil produced globally from 2016 to 2018. In the first six months of 2019, the company produced 13.2m barrels per day of oil, including 10m barrels per day of crude oil.
