Saudi Arabia began Aramco’s IPO, announcing its intention to list on the domestic bourse as the kingdom seeks to diversify and create the world’s most valuable listed company
DHAHRAN, Saudi Arabia/DUBAI - Saudi Arabia’s giant state oil company finally kick-started its initial public offering on Sunday, announcing its intention to float on the domestic bourse in what could be the world’s biggest listing as the kingdom seeks to diversify its economy away from oil.
Sources have told Reuters the oil company could offer 1%-2% of its shares on the local bourse, raising as much as $20 billion-$40 billion. A deal over $25 billion would top the record-breaking one of Chinese e-commerce giant Alibaba in 2014. Confirmation of the sale of shares in the oil giant, whose formal name is Saudi Arabian Oil Co, comes about seven weeks after the crippling attacks on its oil facilities, underlining Saudi Arabia’s determination to push on with the listing regardless.
Rumayyan said the valuation should be determined after the investor roadshow. CEO Amin Nasser told the same news conference that Aramco plans to release the prospectus on Nov. 9. Aramco is also cutting royalties it pays to the state. Effective Jan. 1, 2020, it will adopt a progressive royalty scheme, with a marginal rate set at 15% up to $70 per barrel, 45% between $70 and $100, and 80% if the price rises higher.
But a 1% sale would raise"only" around $15 billion for Saudi coffers, ranking Aramco as the 11th biggest IPO of all time, Refinitiv data show. Initial hopes for a blockbuster international listing of about 5% were dashed when the share sale was halted last year amid debate over where to list Aramco overseas.
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