Saudi Arabia formally starts IPO of oil firm Saudi Aramco

Saudi Arabia officially launched its public offering on Sunday in Saudi Arabia, Aramco, which has delayed over the years. It is hoped that international and local investors will pay billions of dollars in the Kingdom's crown jewels.

Saudi Aramco is the launching gun of the IPO, promised by Saudi prince Mohammed bin Salman since 2016, and has been approved by the Saudi Capital Market Authority. However, unlike traditional IPOs, Saudi Aramco will be offered to investors on expected price ranges for stock prices or on the Tadawul Stock Exchange in Riyadh.

Analysts said the British government hopes local investors will push their share prices with $ 2 trillion in valuations and buoy prices that are likely to be listed overseas. Saudi Aramco also submitted new data held by the Al Saud royal family as state secrets to highlight profitability and low cost through data released since it has been referred to as its "current shareholder".

But energy prices declined due to economic concerns, the war between China and the United States, and the increase in US oil production. The September 14 attacks on the heart of Saudi Aramco already surprised some investors, and a grade company had already downgraded the oil giant.

"We want to share Aramco shares with Saudi Arabians," said Yasir al Rumayyan, Saudi Arabia's governor of public investment funds. "We want financial investors all over the world."

It is difficult to exaggerate the power of an oil company, officially known as Saudi Arabian Oil Co. It produces more than 10 million barrels of crude oil per day, about 10{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of the world's demand. In 2018, the company's net profit was $ 110 billion, far exceeding the gross net profit of oil giants BP PLC, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell PLC and Total SA.

Saudi Arabia's oil is located near the ground in a large pool, which makes it much cheaper to extract. According to the company's IPO document, Saudi Aramco is the world's largest and has proven a liquid reserve of 267 billion barrels, about five times larger than that held by the five largest oil companies.

Prince Mohamed Wang was shocked by Saudi Aramco stock investors since he announced a two-stage IPO plan for the company's 5{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} company in the UK and abroad in 2016. The prince hopes to raise about $ 100 billion from investors, which will flow into the Kingdom's PIF housewife wealth fund for projects to promote employment and major development projects.

Prince Mohamed announced his plan to the Economist magazine in 2016, “I think it is for the benefit of Saudi Mayor and Aramco.

However, the planned IPO has had years of delays on valuation issues and overseas listings. Oil prices over $ 100 per barrel have fallen below $ 30 per barrel in 2014. The benchmark Brent crude oil is now traded for around $ 60 a barrel and is driven by production cuts in OPEC countries such as Saudi Arabia and countries outside the cartel such as Russia. These cuts have limited Saudi production, which is expected to hit $ 50 billion next year.

"Not clear"

The announcement of the Capital Market Authority did not provide the company's schedule, share price or percentage to be offered to the IPO, nor did Aramco later disclose any officials or documents. Al Rumayyan and CEO of Saudi Aramco and President Amin H. Nasser did not comment on whether international listings would still proceed when dealing with journalists in Dhahran, Saudi Arabia, the city hosting Saudi Aramco headquarters.

Ranjith Raja, an oil analyst at data firm Refinitiv, said, “Usually, when we do an IPO, we're setting a target price. "It's not yet clear what they want to see."

Based on this, Saudi Arabia could rely on local investors to raise stock prices, Raja said.

Al Arabiya, a satellite channel in Saudi Arabia, cited an anonymous source last week and announced that the stock price will be priced from November 17. The final price of this stock will be set on December 4th, and the stock transaction will be held in Tadawul on December 4th. 11, the channel reported. This channel is closely related to the Al Saud royal family of kingdoms, and it seems to have correctly identified Sunday as the beginning of the IPO.

Analysts said Apple and Microsoft each cost $ 1 trillion. By announcing that the IPO began on Sunday, Prince Mohammed may have been convinced that the IPO would receive a lower rating to move.

Saudi Aramco convinced investors by considering questions about valuation and potential risks for future attacks or geopolitical risks. An announcement, released on the Aramco website last month, expressed its intention to offer investors $ 75 billion in dividends in 2020. This is the payment per share that the company distributes to shareholders as a return on the money invested in the stock.

It also promised that "non-government shareholders" will receive preferential salaries each year with dividends of less than $ 75 billion between 2020 and 2024.

But beyond stocks, concerns persist that Saudi Arabia could be hit by another attack, such as September 14. The United States condemns the attack on Iran. Tehran claimed to have not fired the cruise missiles and drones used in the attack. Yemen's Houti rebels insisted on responsibility, but analysts say the weapons used would not have the range to reach their target in Yemen's Houtee-controlled areas.

Al Rumayyan responded to a reporter's question about the safety of Aramco investments, talking about how quickly the company recovered production after the attack.

"Oil traders saw this as not an incident, which means it's really safe." "Money is what you say."

Source: AP