Sunday, November 10, 2019
After a long delay in the planned IPO of oil giant Aramco, the subscription period for shares of the Saudi energy group is due to begin next Sunday. Private investors are likely to subscribe for the shares from 17 to 28 November, institutional investors have until 4 December time for their orders. This is evident from the stock market prospectus, which the state-owned company published late Saturday evening.
A week earlier, Saudi Arabia's Financial Market Authority [CMA] had granted approval for the move it had been aiming for about three years. One of the biggest IPOs of all time is expected. Saudi Aramco is the world's largest oil producing company and is considered one of the most profitable companies in the world.
According to the stock exchange prospectus, 0.5 percent of the shares are to be sold to private investors. The quantity to be sold to institutional investors will be set at a later date. The news channel Al-Arabija, funded by Saudi Arabia, has recently reported, citing insiders, that Tadawul, the Saudi Arabian stock exchange, will initially list one percent of its shares by the end of the year and another one percent in 2020. In 2020 or 2021 an international offer should follow.
"We fall under two trillion dollars"
Estimates of the extent of the IPO vary widely. Crown Prince Mohammed bin Salman, the de facto ruler of Saudi Arabia, had hoped for a total valuation of the company of more than two trillion dollars. By contrast, analysts assume a maximum of $ 1.5 trillion. A share of one percent would be worth 15 billion dollars.
Capital market analyst Robert Halver of Baader Bank told n-tv.de that a valuation of $ 2 trillion was exaggerated, "the price will be lower". Especially since the transparency in the Saudi capital market is not as high as in Europe, the US or Asia. "These are risks that need to be tapped, and if you do that, you have to say: we're getting under $ 2 trillion in market value," says Halver. He also referred to the many risks in the oil business and the diminishing power potential of Opec, as well as risks in the political sphere.
With the hoped-for billions in proceeds from the IPO, the Kingdom wants to make itself independent of the oil and gas business. The money is to be invested in other economic sectors.