Saudi Aramco provides more clarity about IPO valuation and prices
The IPO of the world’s most profitable company is on the horizon, and more details for prospective investors have been announced.
In an updated IPO prospectus published today, Bloomberg reported the Saudi oil giant to have put a preliminary valuation between $1.6 trillion and $1.71 trillion. Previous valuation ranges from 16 banks ranged from $1.2 - $2.3 trillion.
The latest announcement gives a more defined range for prospective investors to partake in the company, as well as a range closer to the $2 trillion mark that the Crown Prince of Saudi Arabia has been keen on.
With that range in mind, Saudi Aramco will be looking to raise $24 - $25.6 billion through the sale of 1.5% of its shares — making it the world’s biggest IPO since Alibaba’s in 2014, which raised $21.8 billion. Up to 0.5% of the shares will be allocated to individual investors.
The shares are set to go live on Tadawul exchange in Saudi Arabia on 5 December, with the indicative price range of SAR 30-32 per share.
Bookbuilding for the offering starts on Sunday and retail investors will have to bid at the top end of that range. The company will set the final price for all investors based on institutional investors’ book-building process that ends on Dec. 5.Bloomberg
Retail investors can subscribe for Aramco’s shares between 17-28 November.
Saudi Aramco’s IPO is said to be a key aspect of Crown Prince Mohammed bin Salman’s plan to diversify the economy under Vision 2030. Previous attempts for Aramco’s IPO have been delayed as the Crown Prince insisted a $2 trillion valuation, which saw hesitations from the international investor market.
This time around, the Crown Prince is removing roadblocks as well as sweetening the deal through cutting the tax rate for Aramco, as well as the promise of 75 billion base dividend for shareholders.
The money raised from Aramco’s IPO is said to be “transferred to the sovereign wealth fund” that has previously been the biggest investor in SoftBank’s first Vision Fund with an investment of $45 billion. The fund is known to have invested in Uber and WeWork amongst many other big tech firms. The fund also behind the development of Saudi Arabia’s “$500 billion futuristic city,” as per reports.
Set to be the biggest IPO by many accounts, the next few weeks are crucial for Saudi Aramco to shore up demand and attract investors to bid at higher valuation prices. Final price will be revealed on 5 December.
