Before the end of October, Saudi Aramco, the world’s largest oil producer, will be filing a prospectus for its intended initial public offering (IPO). According to the Wall Street Journal, the publication is expected on Oct. 25 in Arabic, with an English version to be published on Oct. 27. Owned by Saudi Arabia, this is in line with the government’s plan to publicly list the company, as it prepares to make a final decision on whether or not to continue with the offering.
After the prospectus is published, a book building will take place, during which Aramco will try to gauge interest in its shares. This will most likely inform the company’s final decision on the listing. If it eventually happens, the company will list on Saudi Arabia’s Tadawul exchange, as the next step in a series of actions to reform the country’s economy by Crown Prince Mohammed bin Salman.
The plan is to initially list 5% of the oil producer locally and then undergo ad international listing a little later by next year or 2021. Basically, the government hopes to soften the country’s heavy reliance on oil and diversify into other profitable endeavors. Saudi Arabia also hopes to successfully raise a few billion dollars from the listing.
Saudi Aramco had initially planned to go public in 2018. Last year, at the World Energy Conference in Abu Dhabi, the company’s President and CEO Amin Nasser made this known to reporters, suggesting that even though it was ultimately a decision to be made by the government, it would happen “very soon”.
At the time, Nasser also said that the listing would also first be domestic, but would later spread to other markets. However, plans were reportedly shelved because government officials were supposedly not prepared to reveal Aramco’s books, and also because the listing venue was undecided.
Last month, drone attacks were targeted at Aramco’s production plants in Abqaiq and Khurais as well, which destroyed about half of the company’s oil production. In response, Saudi’s stock market took a hit and shed some of its weight as a few analysts also predicted at the time, that crude futures were bound to increase as much as $10 per barrel.
A few days after, about half of the crude production was already restored and the government announced that Aramco would return to the status quo before the end of the month. It seems that Aramco, as well as the Saudi government, have gotten past the situation as the plans for its listing keep taking shape.
Per the WSJ report, the crown prince has expressed a desire for Saudi Aramco to be valued at $2 trillion. However, expert analysts and Aramco management who make up the team behind the offering, have put the valuation somewhere around $1.5 trillion. By late November or early December, up to 2% of the company is expected to be publicly available.
At the moment, there is no official word either from Aramco or from the Saudi government.