Bidding for ‘milestone’ sale of Aramco shares set for next week
Bidding for shares in the world’s most profitable company will start in one week, it has been announced. Saudi Aramco, the state-owned oil giant, said it plans to provide the final offer price, precise number and percentage of shares on 5 December.
Its prospectus, released on Saturday night, showed profits of $68.2bn (£53.3bn) for the first six months of this financial year, but did not include any indication of the value the Saudi government hopes to achieve.
Price guidance for the share sale is also expected to be published next week.
Company analysts have valued it between $1.1tn–$2.5tn. Bloomberg reported that the Saudi ruler, Crown Prince Mohammed bin Salman, would be satisfied with a valuation of between $1.6tb and $1.8tn. If that is achieved, it would be the biggest initial public offering in history, dwarfing the current record of $25bn raised by China’s tech firm Alibaba in 2015.
The government is pressing Saudi Arabia’s richest families, including individuals controversially detained when the crown prince came to the throne in 2017, to commit large sums to the IPO.
The prospectus warned that terrorism and war could impact on the share price. It also warned that Saudi Arabia’s stock market may not be able to cope with the listing and expected high turnover in the volume of shares traded.
The Saudi government, anxious for the sale to succeed, has cut taxes on Aramco and revealed incentives for investors not to sell shares on.
Yasir al-Rumayyan, the chair of Saudi Aramco, described the green light for Aramco’s listing as “a significant milestone in the history of the company” that marks “important progress towards delivering Saudi Vision 2030, the kingdom’s blueprint for sustained economic diversification and growth”.
Ryiadh hopes to use its economic crown jewels to help modernise its economy and gain international acceptance despite its troubling human rights record.
Aramco – which stands for Arabian-American oil company – supplies 13% of the world’s oil, producing 11.6m barrels of oil a day from its reserves, which are estimated at almost 230bn barrels.
Its profits are down slightly from the year before but still well ahead of the world’s five largest listed oil companies combined.
The most likely buyers of Aramco shares include sovereign wealth funds and state-backed institutions in Russia, China and Abu Dhabi.
Banks hired to work on its market debut include Citigroup, Credit Suisse, Goldman Sachs, HSBC, JP Morgan, Merrill Lynch and Morgan Stanley. Saudi Arabia’s National Commercial Bank and Riyadh-based Samba Capital have also advised on the deal.
The international banks have come under fire from green groups for undermining global efforts to tackle the climate crisis by supporting the listing of the world’s biggest oil producer.
Last month 10 environmental groups, including Oil Change International and Friends of the Earth US, warned banking bosses that the listing would lead to “the biggest single infusion of capital into the fossil fuel industry” since the Paris climate accord in 2015.
The letter also raised concern over the banks’ eagerness to help raise billions of dollars for Saudi Arabia, “given the horrendous human rights record of the Saudi regime”.
The Guardian revealed last month that Aramco was solely responsible for 4.38% of the world’s carbon emissions since 1965, making the oil giant the biggest corporate polluter in the world. Aramco has countered the claims with data that a spokesperson said showed that it had the smallest carbon footprint of any of the oil majors per unit of output.