Saudi Aramco’s Record IPO To Begin On November 17

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Saudi Aramco will allow investors to start bidding for shares in the world’s most profitable company from Nov. 17. It left potential buyers in the dark about the size of the stake it plans to sell and the pricing range.

The Saudi stock exchange rules prohibit the oil giant from listing additional shares for six months after the start of trading, according to its more than 650-page prospectus.

Also, the Saudi government, the company’s sole owner, won’t offer any additional shares during the 12-month period after listing, but retains the right to sell to foreign governments or investors affiliated with foreign governments.

Key details:

  • Institutional book-building period: Nov. 17-Dec. 4
  • Retail subscription period: Nov. 17-Nov. 28
  • Targeted percentage of shares allocated to individual investors will be up to 0.5% of shares
  • Final pricing: Dec. 5
  • Refund of excess subscription amount to individual investors: Dec. 12
  • Aramco sets up a share-incentive plan for employees
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Click here for prospectus

Saudi Arabia is pulling out all the stops to ensure the success of the IPO after Crown Prince Mohammed bin Salman finally decided to offer shares in the world’s largest oil producer. The kingdom cut taxes on Aramco for the third time, revealed incentives for investors not to sell shares and is considering boosting dividends further.

While the prospectus includes Aramco’s profits for the first nine months and details of the company’s operations, it doesn’t include any indication of what valuation the government hopes to achieve. Price guidance for the share sale is expected next week, but people familiar with the deal have told Bloomberg that Crown Prince Mohammed bin Salman would be satisfied with a valuation of between $1.6 trillion and $1.8 trillion.

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Analysts from 16 banks have offered a valuation on the company, ranging in estimates from $1.1 trillion at the bottom right up to $2.5 trillion. The midpoint was $1.75 trillion, according to people who’ve reviewed all the research.

Aramco earned net income of $68.2 billion in the first nine months compared with $83.1 billion a year ago. Revenue slipped to $217 billion from $233 billion.

 

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