Middle Eastern oil giant Saudi Aramco has officially announced the price range for its long-awaited initial public offering (IPO). At the top end of its announced price range, Saudi Aramco will have a market valuation of more than $1.7 trillion.
The figure is, unfortunately, lower than Crown Prince Mohammed bin Salman's expected $2 trillion valuation for the company. However, if the company manages to hit that number, it will officially become the largest IPO in history.
Saudi Aramco's domestic listing will reportedly be only restricted to Saudi nationals and select foreign institutions given prior consent to invest in the country's stock market.
According to officials, the company will not be allowed to sell its shares directly to investors in the United States and other countries. The oil giant released an addendum to its IPO prospectus on Sunday, removing references to US securities regulations it had included in its original prospectus.
Company officials announced that the company will be placing only up to 1.5 percent of its shares on the domestic listing. This will roughly be around 3 billion shares, to be sold at an indicative price range of 30 riyals to 32 riyals or $8 to $8.53 at current exchange rates.
Retail investors interested in purchasing shares will have until November 28 to sign up for the IPO. Meanwhile, Institutional investors have until December 4 to subscribe to the listing.
At this price range, the IPO will have an estimated value of as much as 96 billion riyals or $25.6 billion. At the lower end of the range, Aramco will have a market value of $1.6 trillion. If the company managed to hit the top-end of the range, the IPO could dethrone the current highest IPO record held by China's Alibaba Group. The Chinese company earned the top position in 2014 with its $25 billion New York public debut.
Aramco could potentially exceed the $25.6 billion-limit if the demand is high enough for it to utilize its "greenshoe" over-allotment option. If this happens, Aramco will be allowed to release up to 15 percent more of its initial 1.5 percent IPO listed shares.
Investment banks and institutions have stated that the price range released by the company was in line with expectations. Domestic and international financial institutions had originally pegged the company's valuation range to be between $1.2 trillion to $2.3 trillion.
Aramco is currently the world's most [profitable company, generating earnings more than five times that of US companies such as Apple. For 2020, the company announced that it will be releasing dividends of around $75 billion.
