Aramco IPO to finance the world’s most ambitious project

Picture this – Waking up in a high-rise penthouse facing the Red Sea, with a
giant artificial moon that live-streams images from outer space hanging from
up. If you need to head somewhere, you order for an automated flying taxi to
transport you as it genetically modifies your organs to make you stronger.

And by the
time you get home, the robot assistants have cleaned up the place and made you one
of your favorite dishes. Then, later on, you decide to step out for a
night out with your loved ones in one of the several five Michelin star restaurants
near you and thereafter, have a tour of the robot dinosaur park.

Sounds
like a fairy tale, right? Well, maybe to you, but not Saudi Arabia’s Crown
Prince Mohammad bin Salman Al-Saudi. All the above-mentioned have directly been
lifted from his great plan to build a new city with such qualities.

The city,
described as “land of the future,” will be known as Neom, and will be the size of an average
city in the UK or the US. Plans are underway to build Neom City on Saudi’s
northwest coastline. The city will be built strategically to attract
international investors and tourists as well as “the world’s greatest minds and
best talents.”

While you
may find Salman’s plan to be ambitiously crazy, the crown prince is already
laying grounds for his city. Bloomberg reports that two Saudi contractors have already been given an okay
to commence the construction.

Sources
say the mega-city will cost the kingdom about $500 billion, an amount that has many
investors sweating. Earlier this year, the IMF reported a 7% deficit in Saudi’s
budget.

So with a
budget deficit and unstable global oil prices, how does the crown prince plan to
finance the building of his ultra-modern city?

The prince
is counting on Saudi Aramco, the most profitable public company in the world to
build Neom City.

Many may
term it as a coincidence – but the fact that the city’s construction kicks off
as the country’s national oil company Saudi Aramco plans to issue its IPO is no coincidence.

Earlier
last week, the country’s Capital Markets Authority announced that the oil giant
would finally trade on its local stock market, Tadawul. Aramco was listed as
the most profitable company in 2018, having generated a net income of $111
billion. Coupled with a valuation of $1.5 to $2 trillion, the whole Saudi
equity market would be no match for the oil company.