Saudi Aramco might soon be on the Riyadh stock exchange (Tadawul) with Saudi Arabia planning to list 1% of the state oil giant before the end of this year. It plans to list another 1% on the exchange in 2020, according to sources as quoted in a Reuters report.
The Initial Public Offering (IPO) which is touted to be the world’s largest one, is the pet project of Crown Prince Mohammed bin Salman, who eventually wants around 5% of the company to go public as part of his vision for the diversification of the Saudi economy, create more jobs, and attract more foreign investment in the country.
However, sources close to the matter say that the company is planning a gradual listing on the home ground first before going public in an international stock market. The Reuters report quoted the source as saying that listing 1% this year and then another 1% in 2020 would make it easier for the stock market. “The smaller the target liquidity, the easier and the sooner the local IPO will be,” said the source, adding that the listing would be open to qualified foreign investors.
The exact timing of the listing has not yet been decided with sources speculating that it might be announced at an investment conference to be held in Riyadh in October.
In August, it was reported that Aramco might be considering a two-stage initial public offering (IPO) with a domestic debut and a subsequent international listing possibly in Tokyo.
The much-touted IPO was earlier scheduled for 2018 and was delayed because it did not reach the $2 trillion valuations, as was envisaged by Saudi rulers. Analysts and bankers, however, peg the valuation of $1.5 trillion to be a more realistic one.
Aramco is preparing to sell up to 5% stake by 2020-2021, with reports suggesting that the IPO aims to raise up to $100bn based the $2 trillion valuations of the company. Based on the valuation, a 1% listing would be worth at least $20bn.
According to sources, the company, which recently appointed Yasir Al-Rumayyan, head of the sovereign wealth fund, as its chairman, is still in the process of meeting banks and is planning to appoint advisers in the coming days.
Not too long ago, the company, in what is considered a first for Aramco, published its half-year financial reports, following the opening of its secretive accounts for the first in April, revealing itself to be world’s most profitable company. According to the financial reports, its first-half net income for 2019 had slipped nearly 12% to $46.9bn on lower crude prices.