Saudi Aramco IPO: Subscription period starts next Sunday


After a long delay in the planned IPO of oil giant Saudi Aramco, the subscription period for shares in the Saudi energy group is set 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. The final issue price will then be announced on 5 December, it says in the documents for the IPO. However, how many shares should be distributed in total was left open by the 600-page prospectus.

The world's largest oil company Saudi Aramco also wants to allow small investors to participate in its IPO. A 0.5 percent stake in the group is to go to retail investors. For the government is after the IPO a holding period of one year before it can sell more shares. The quantity to be sold to institutional investors will be set at a later date.

Aramco is the largest and most valuable company in the world. Unlike initially assumed, however, for the time being only a stock market debut on the Tadawul stock exchange in Riyadh is planned, no international stock market launch. The government hopes for a valuation of two trillion dollars. Analysts warn, however, that the market value will be lower.

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.

A week ago, Saudi Arabia's Financial Market Authority (CMA) 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.

With an estimated market value of up to two trillion dollars, this would be the largest IPO so far. Aramco would be twice as valuable as Microsoft, currently the highest rated company, and seven times more than Exxon Mobil, the largest listed oil company.

Estimates of the size of the IPO, however, 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.

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.

The stock records also list the risks, including terrorist attacks on the Group's assets or the Riyadh government's right to cut oil production. On September 14, a drone attack on the company's oil rigs had been severely damaged.

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