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Thursday, Oct 29, 2020

World’s most profitable company set to go public after Saudi crown prince gives final nod – media

World’s most profitable company set to go public after Saudi crown prince gives final nod – media

Saudi Crown Prince Mohammed bin Salman has greenlighted the initial public offering (IPO) of state oil giant Aramco. It could set a new record if the company’s ambitious valuation is achieved.
The final decision was made during a meeting on Friday, as bin Salman, commonly known as MbS, concluded that there is enough support from local investors for Aramco’s long-awaited stock market debut, Reuters and Bloomberg reported, citing sources. The official statement on the IPO launch is expected on Sunday, when the new trading week starts at the Saudi stock exchange.

Only a small portion of the company – a total of five percent – is expected to be auctioned off. It will initially be listed on the domestic market before international sales are expected to start.

Saudi Aramco reportedly wants to achieve a $2 trillion valuation – a target considered too ambitious by some. However, the valuation could end up at around $1.5 trillion, according to Reuters sources familiar with the matter. In a bid to attract more investors, the oil giant reportedly plans to pay $75 billion in dividends in 2020 and guarantees that they will not go down for the next four years no matter what happens to crude prices.

While Aramco officials have been in talks with institutional investors around the world, banks are reportedly competing for a role in the deal. More than 20 lenders stepped in, including Citigroup, Goldman Sachs Group, and JPMorgan Chase & Co.

Despite investor interest in the IPO, Aramco will still need money from the wealthiest Saudi families, many of whom were targeted in the 2017 campaign against corruption, which saw Riyadh’s Ritz-Carlton Hotel turned into a prison for royal elites accused by the government of corruption.

The state-owned energy giant initially floated the idea of going public in 2016, but the IPO was subsequently postponed. Last year, MbS vowed that the IPO for Aramco will happen between late 2020 and early 2021.

After a drone attack on the company’s oil processing facilities in September, it was feared that the IPO listing would be delayed. In October, the Financial Times reported that the oil giant wanted to assure its investors first and present its quarterly report to show that the strikes did not have a significant effect on production capabilities.
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