Saudi Arabia announced on Sunday its intention to float shares of Saudi Aramco on the country's stock exchange. The announcement essentially kick-starts what could be the world's largest initial public offering (IPO) of the world's most profitable company.
While the kingdom did announce its intention of listing Saudi Aramco on its domestic bourse in the coming weeks, officials neglected to reveal any other relevant details such as the date of the launch, the number of shares that will be sold, and the prices of each share.
In initial assessments done by global banks, the company is likely to be valued by investors at around $1.5 trillion. This is unfortunately below the expected $2 trillion valuations by Crown Prince Mohammed bin Salman, who first revealed the idea for the company to go public almost four years ago.
Saudi Aramco's IPO is part of the Crown Prince's ambitions to diversify the country's income sources. The capital raised by the IPO is meant to be invested in non-energy developments and projects, which will hopefully become new revenue streams for the country as it tries to diversify out of oil.
While the details of the IPO have not yet been made officials, reports citing sources close to the matter have revealed that the kingdom could offer around 1 or 2 percent of the company's shares in its initial launch. This would translate to a capital fundraising of between $20 billion and $40 billion. If the company does manage to raise more than $25 billion, the IPO would overtake the current record holder, Chinese e-commerce giant Alibaba Group.
Saudi Aramco chairman, Chairman Yasir al-Rumayyan, mentioned over the weekend that they believe that it was the right time for the company to go public. He stated that new investors should find the upcoming IPO a great opportunity to benefit from the company's ability to generate profits, both in the short and long-term.
The company official also announced that they will be spending the next 10 days meeting investors and bankers to gauge the interest in the IPO. This will apparently then be followed by the announcement of the IPO's pricing. In response to questions regarding an international listing, Rumayyan stated that they have yet to make a decision and have yet to decide on a timeframe and a venue.
Saudi Aramco also addressed concerns related to the September 14 attacks on its facilities by stating that they did not have any material impact on its business, finances, and operations. The company did not elaborate on its plans to beef up security following the attacks, but it did reassure potential investors that they remained determined to push through with the listing.
