On November 17 local time, Saudi Arabian national oil company (Saudi Aramco) announced that it would issue 1.5% of its total shares, with a price range of 30-32 Saudi Riyals (US $8-8.5). The company will be valued at between $1.6 trillion and $1.7 trillion. This will still make it the world's largest listed company, but far below the $2 trillion valuation sought by Saudi Crown Prince Mohammed bin Laden Salman.
Saudi Aramco said its initial public offering is expected to issue 1.5% of the company's total shares on the Saudi stock exchange, or about 3 billion of its 20 billion ordinary shares. By this calculation, the company will raise $24 billion to $25.6 billion from its IPO.
According to the latest prospectus, the subscription date for institutional investors is November 17 to December 4, and for individual investors is November 17 to November 28. Saudi Aramco will issue its final offer on December 5.
In order to reduce its dependence on the oil economy, Saudi Arabia formulated the "2030 vision" economic reform plan in 2016. The IPO of Saudi Aramco, its national oil company, is an important step.
In August, Saudi Aramco officially announced that it would restart its IPO plan. Previously, Amin Nasser, chief executive of Saudi Aramco, said at the world energy conference that Saudi Aramco had planned to list on the Riyadh stock exchange, and that & ldquo; everything is ready and will be listed soon & rdquo;. In addition to Saudi Arabia, Amin & middot; Nasser also acknowledged plans to list in other parts of the world, but did not give specific locations for overseas listing. However, the latest news indicates that Saudi Aramco does not intend to conduct an IPO in the United States.
Who will buy it?
The prospectus said retail investors had to file an application by November 28, noting that at most 0.5% of the company's shares would be allocated to retail investors. After the IPO of Saudi Aramco, the Saudi government will face a six-month ban. Investment banks such as JPMorgan Chase, Goldman Sachs, Citigroup and Morgan Stanley are responsible for underwriting.
Although Saudi Arabia is still striving for overseas institutions to invest in the United States, the market reaction is relatively cautious, and the global roadshow itinerary has been reduced, and will no longer include places such as Japan and the United States.
In contrast, Saudi Arabia's domestic institutions, exchange qualified overseas investors and retail investors are enthusiastic. This year, Saudi Arabia officially included in MSCI Emerging Market Index, and the listing of Aramco will further enhance its weight.
Gulf investors and sovereign funds are also Saudi Arabia's active targets. Prior to that, Kuwait Investment Authority expressed its intention to invest in shares, while Bahrain said it would make a decision based on the details of the offering.
Saudi officials have visited Russia and other countries in recent weeks, hoping to get more financial support.
&An important part of "vision 2030"
In order to reduce its dependence on the oil economy, Saudi Arabia formulated the "2030 vision" economic reform plan in 2016. The IPO of Saudi Aramco, its national oil company, is an important step. Saudi Arabia is the world's largest exporter of crude oil, and the listing of Aramco's shares is the capital raised by Saudi Crown Prince Mohammed & middot; Salman to get rid of the dependence of national economy on oil to invest in super large-scale construction and industries other than energy.
S & P global ratings said the IPO would allow Saudi Arabia to strengthen its financial position. &"If the funds raised are then used effectively, they can support Saudi Arabia's long-term economic growth. ”
AMEC is the most profitable company in the world, and plans to pay dividends of up to $75 billion next year, more than five times the amount paid by apple.
However, the investment in Aramco should also take into account the trend of oil price. As countries are gradually introducing measures to reduce greenhouse gas emissions, and more and more people use electric vehicles, it is currently expected that global crude oil demand will start to decrease from 2025.
IPO twists and turns
Since 2016, it has been reported that Saudi Aramco will invest 5% of the company's shares in the stock market in the form of IPO to raise $100 billion.
Saudi Aramco was originally expected to complete its IPO by the end of 2017, but the plan has been delayed. Until 2018, there were even rumors that its IPO plan was put on hold.
In April this year, Saudi Aramco issued US $12 billion bonds for the first time, with a subscription ratio of more than eight times, achieving great success, and the IPO plan has come back into people's view. But in September, after drones attacked two oil facilities in Saudi Arabia, half of Saudi oil production was shut down and IPO plans were again delayed.
On November 3, Saudi Arabia's capital market authority (CMA) said it had issued a resolution approving the Saudi Aramco IPO.
Amazing performance
Saudi Aramco is considered to be one of the most valuable companies in the world. In 2018, it generated a net profit of US $111.07 billion, nearly twice that of apple. The top five oil companies in the world & mdash; ExxonMobil, Royal Dutch Shell, BP, dorda and Chevron combined.
According to the first semi annual performance report released in August this year, net profit during the reporting period was US $46.9 billion, down 12% from US $53 billion in the same period last year due to the decline of oil price. The company said it would pay a special dividend to its largest shareholder, the kingdom of Saudi Arabia.
Saudi Aramco has 263 billion barrels of oil and 320 trillion cubic feet of natural gas, according to an independent audit.
Saudi Aramco's debt level is very low. In 2018, Moody's, a rating company, was the largest cash holder of all non-financial companies in Europe, the Middle East and Africa, with free cash flow of $38 billion.
(source: China Chemical daily)