Saudi Aramco IPO prospectus projects oil demand to increase in 20 Years

Saudi Aramco executives dismissed concerns about peaking global oil demand as recently as April this year but views are changing ahead of what could be the biggest-ever share sale

Saudi Aramco executives dismissed concerns about peaking global oil demand as recently as April this year but views are changing ahead of what could be the biggest-ever share sale

Saudi Aramco, the world's most profitable company will make $1B worth of shares available to employees and executives under the incentive plan included in the 658-page IPO prospectus.

For now, the listing will be on Tadawul only, with the worldwide one planned for a few years later, according to comments from Riyadh officials.

"Aramco IPO is an opportunity that shouldn't be missed, the largest company in the world ..." But the incomplete disclosures will stand as a test of investors' willingness to leave themselves open to the whims of the kingdom's highest authorities.

The largest IPO has been $25 billion and the Aramco IPO size would depend on the number of shares and price.

The total number of shares in the company amounts to 200bn.

"The targeted percentage of offer shares allocable to individual investors will be up to 0.5% of the shares", the prospectus said.

Sources have said the company could sell 1 to 2 percent on the Saudi stock market. The company's directors believe that the data provided by the industry consultant are "reliable".

Saudi Aramco had previously said that crucial details for the listing on the Tadawul exchange would be revealed after the book-building period.

Saudi Aramco will allow investors to start bidding for shares in the world's most-profitable company from November 17.

Spurs frustrated in draw with Sheffield amid VAR dispute
Sheffield responded 90 seconds later when David McGoldrick scored from a cross by Stevens, but a lengthy VAR review showed Lundstram narrowly offside in the buildup.

Aramco can not list additional shares for a period of six months after trading starts, and will also be restricted from issuing additional shares for 12 months.

"If Aramco decides to significantly lower its overambitious valuation expectations and float the company on investor-friendly terms, these will be considered a sign of strength and wisdom rather than weakness", said Slava Breusov, a senior analyst with the emerging and frontier equities team at AllianceBernstein, which manages nearly $600 billion.

The kingdom's plan to sell part of the company is part of a wider economic overhaul aimed at raising new streams of revenue for the oil-dependent country, particularly as oil prices struggle to reach the $75 to $80 price range per barrel analysts say is needed to balance Saudi Arabia's budget.

It did, though, mention possible risks, including the government's control over oil output and terrorist attack. Attacks on key energy facilities temporarily halved the kingdom's oil production in September. Correct throughout the last three years, we enjoy been guilty for one in every eight barrels of crude oil produced globally and our proved liquids reserves, on the dwell of 2018, enjoy been 5 instances bigger than the combined proved liquid reserves of the Five Main IOCs. The company said it did not expect the hit to its infrastructure to have a "material impact" on its business.

Saudi Aramco also said that concerns over climate change could "reduce global demand for hydrocarbons". Back in April, Aramco gave no indication that a peak in oil demand was on the horizon.

The company flagged risks of climate-related litigation, and also raised concerns about antitrust suits in the USA connected to Saudi Arabia's membership of Opec, which could test Saudi Aramco's ability to rely on a sovereign immunity defence.

"In terms of scale and quality of Aramco's assets, they've got the world's best, bar none", said Dwight Anderson, the founder of hedge fund Ospraie Management. But it will still pay up to $100m a year to fund "services and studies" for the energy ministry.

The prospectus named a host of global banking giants - from Citibank to Credit Suisse and HSBC - that it has hired as financial advisors and bookrunners. Goldman Sachs has been selected as the "stabiliser" of the shares in the secondary market.

The company implied that it will also include a stock purchase plan for employees once it goes public.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.