Via Financial Times

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Saudi Aramco released the long-awaited prospectus for its initial public offering on Saturday, saying it would offer up to 0.5 per cent of the kingdom’s state-owned oil company for sale to retail investors but disclosing few other details.

The offering is tipped to be the biggest ever. But Saudi Aramco did not reveal the number of shares on offer, the total percentage of the company to be sold, a price range or even the date for the listing. They also did not disclose fees for bankers.

The release of the IPO prospectus marks the furthest the kingdom has gone in its endeavour to list shares in the country’s biggest revenue earner, almost four years since Crown Prince Mohammed bin Salman first disclosed his ambitions for one.

After repeated delays, largely stemming from questions over the company’s ability to secure the $2tn valuation target sought by Prince Mohammed, it is set for a stock market listing as early as next month.

“An initial public offering in the Kingdom of this kind and size is unprecedented,” Saudi Aramco said in its prospectus.

If all goes to plan, this could mean Saudi Aramco will have shareholders aside from the government for the first time in nearly four decades. The company said the total number of shares in the company amounted to 200bn. People familiar with the process said the kingdom sought to sell 1 to 3 per cent of the company, raising $20bn-$60bn. While 0.5 per cent will be made up of retail shareholders, it is expected that institutional investors will comprise a big share on top of this amount.

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Saudi Aramco had previously said crucial details for the listing would be revealed after the book building period. In the prospectus it added that this would take place between November 17 and December 4.

The final price for the IPO is expected to be announced a day later.

Saudi Aramco has already made a series of moves to entice investors — from changing royalty payments and tax rates to announcing a mega minimum dividend of $75bn a year — in order to secure a bumper valuation for the company.

While dangling the prospect of significantly high payouts to investors, the company on Saturday warned that it may change its dividend policy without prior notice to its minority shares.

Among other risk factors, the oil company said it was vulnerable to fluctuations in commodity prices, reliance on Asian consumers, political and social unrest, terrorism and climate change action.

Saudi Aramco is listing shares in the company as its international rivals face growing pressure to take responsibility for their role in enabling global warming and as activists seek to curb fossil fuel production.

“Climate change concerns and impacts could reduce global demand for hydrocarbons and hydrocarbon-based products and could cause the Company to incur costs or invest additional capital,” it said.

Despite trying to untangle its operations and accounts from the state, the company said that the government “may direct the Company to undertake projects or provide assistance for initiatives outside the Company’s core business” inconsistent with commercial objectives.

The banks leading the IPO include Citigroup, Credit Suisse, Goldman Sachs, HSBC, JPMorgan, Bank of America, Morgan Stanley and two domestic banks in Saudi Arabia. Goldman Sachs has been selected as the “stabiliser” of the shares after trading.

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Saudi Aramco disclosed its financials and details about the kingdom’s oil reserves for the first time earlier this year when it issued its debut bond, inner workings that have for decades remained a closely guarded secret.

In 2018, it reported $111bn in net income, making it the most profitable company in the world.