Request granted – Regulator approves Saudi Aramco’s IPO

Request granted – Regulator approves Saudi Aramco’s IPO
Written by:
Damian Wood
4th November 2019
  • Saudi Aramco’s IPO has been approved by the Kingdom’s regulator, Tadawul
  • The oil producer’s shares are expected to go live next month
  • Saudi Aramco hopes to raise about $45 billion in exchange for a 3% stake in the company

The world’s most profitable company is moving ahead with its IPO. State regulators approved Saudi Aramco’s Initial Public Offering just a few hours ago. Analysts expect the oil giant to list on the Saudi Stock Exchange (Tadawul) as part of the Kingdom’s plan to diversify from the oil industry.

Bankers recently valued the company at $1.5 trillion, and it expects to surrender about 3% of that to a new set of investors, potentially raising a record $45 billion from the stock market. Aramco’s shares are expected to be priced in December even as many investors remain curious after years of anticipation.

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Saudi Aramco is no ordinary company; the oil producer is believed to be the backbone of Saudi Arabia, a Middle East oil-dependent kingdom. But thanks to regulators, the company is now set to start trading on Saudi’s stock market.

“This is truly a historic day. We’re happy to announce the listing of Saudi Aramco company at the Saudi Stock Exchange market,” Aramco Chief Executive Amin Nasser said on Sunday.

The company is the centerpiece of Saudi’s crown prince Mohammad bin Salman bin Abdulaziz’s vision 2030 and is expected the net the kingdom a substantial amount of capital for its planned diversification exercise. There were initial plans to list the firm on international exchanges including the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE) but they had to be aborted for fears of transparency. But talks of an international listing are still ongoing even after the local listing.

“The initial idea was either to list it either in New York, London, or Hong Kong, but there had been issues especially relating to the New York Stock Exchange, which include a possible litigation and the NOPEC law that could have been adopted by the US Congress,” Rauf Mammadov from the Middle East Institute told Aljazeera in an interview. He further added that the Saudis were concerned about the issues, thus informing their decision to go for a local listing.

The ambitious Saudi prince set the oil giant’s price tag at $2 trillion, with other major companies around the world such as Apple and Microsoft standing at only half of Aramco’s value. However, it would appear the crown prince was contented with the bankers’ lower valuation of $1.5 trillion, perhaps preferring not to delay the IPO any further.

Some analysts argue that the firm’s valuation would probably be lower had they gone for an international listing. But for now, all eyes are fixed on the world’s most profitable company, Saudi Aramco, as the official public trading day approaches.

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