ARAMCO: One of the Most Important IPO's in History

Shoug Alderwish, Associate Maxwell Stamp

Nov, 26, 2019

It was 17th November, and Saudi’s began flocking to banks to subscribe in Aramco's shares; More than 20 global investment banks are working on Aramco’s IPO coinciding with the start of the period to build the order book for the institutional and individual underwriting segments.

Aramco is the world’s most profitable company by net income, surpassing this metric for Alphabet, Amazon and Microsoft combined.

Saudi Aramco accounts for 10 percent of global oil production and, as such, is vital in terms of guaranteeing global energy security. Given its sheer size, the powers that be may, at a later stage, decide to also list Aramco on one of the big international stock exchanges, such as London or New York. While dual listings have their own issues, access to deep markets may also have its advantages.

Aramco’s IPO set to value at nearly $1.7 trillion; sets indicative price range of SR30-32 per share

The minimum subscription per retail investor is 10 shares. However, there will be no maximum limit for retail investors allowing them to choose to apply for as many shares as they wish.

Each eligible retail bonus Investor who continuously and uninterruptedly holds the allocated offer shares for the Bonus Holding Period will receive one Bonus Share for every 10 allocated offer shares held, up to a maximum of 100 Bonus Shares.

This public offering is part of a larger plan to reduce Saudi Arabia’s dependence on oil. Crown Prince Mohammad bin Salman’s “Vision 2030” economic reform plan is looking to invest the money raised through the IPO into diversifying the country’s economy.

Opinion: Taduwul Executive Director - Khalid Alhassan when we asked said:

"Aramco's offering will change Tadawul's position from more than 10 markets in the world in terms of market capitalization"

Ibrahim Malas - Economic Consultant at Maxwell Stamp KSA commented:

"The privatization of ARAMCO provides numerous opportunities for the petroleum company and the Kingdom of Saudi Arabia, for example:

  • The market valuation of the economy’s largest asset

  • Energizing the local stock market

  • Providing a bellwether and barometer of the Kingdom’s economic health

  • It will bring fresh capital to the sovereign wealth fund that will lead to greater investment and diversification.

  • The transparency and further oversight that listing brings will further drive efficiency and performance of ARAMCO and may lead to incentivise employee share options.

Overall the listing has to be seen in a positive light."