Saudi Arabian Oil Co’s (Aramco) much-anticipated initial public offering (IPO) will begin on Sunday, the company’s prospectus said, without revealing the size of the stake sale or the pricing range.
The 658-page document, released just before midnight on Saturday, said the final share price will be determined on Dec. 5 — a day after the subscriptions close — in what is expected to be the world’s biggest IPO.
After years of delays and false starts, Aramco officials last week announced a share sale on the Riyadh stock exchange for the world’s most profitable company, which pumps 10 percent of the world’s oil.
The prospectus said the state giant would sell up to 0.5 percent of its shares to individual investors, but it has still not decided on the percentage for larger institutional investors.
The Saudi stock exchange rules prohibits the oil giant from listing additional shares for six months after the start of trading, according to the prospectus.
Also, the Saudi Arabian government, Aramco’s sole owner, will not offer any additional shares during the 12-month period after listing, but retains the right to sell to foreign governments or investors affiliated with foreign governments.
The document also highlighted risks including the potential for terrorist attacks, the possibility of antitrust legislation and climate change concerns that could reduce global demand for hydrocarbons.
“The disclosure, transparency combined with the global research and analysis that it will provoke is in itself of major value to the kingdom and the company,” said Ali Shihabi, founder of the now-shuttered pro-Riyadh think tank Arabia Foundation.
However key details were missing from the prospectus, including the company’s valuation and how much Aramco expects to raise from the IPO.
It is unlikely to hit its US$100 billion target, based on a US$2 trillion valuation that Saudi Crown Prince Mohammed bin Salman had initially hoped for.
Investment research firm Bernstein estimates the valuation could fall between US$1.2 and US$1.5 trillion.
Based on a US1.5 trillion valuation, a 2 percent stake sale would help Aramco raise US$30 billion.
That would still make it the world’s biggest IPO, eclipsing Chinese retail giant Alibaba Group Holding Ltd’s (阿里巴巴) US$25 billion listing in 2014.
Saudi Arabia is pulling out all the stops to ensure the success of the IPO, a cornerstone of Mohammed’s ambitious plans to steer the economy away from oil by pumping tens of billions of dollars into a host of megaprojects and non-energy industries.
The government has reportedly pressed wealthy Saudi business families and institutions to invest in the IPO, and many nationalists have labeled it a patriotic duty.
Aramco had initially been expected to sell a total of 5 percent on two exchanges, with a first listing of 2 percent on the kingdom’s Tadawul bourse, followed by a 3 percent listing on an overseas exchange.
However, the firm has said there are no current plans for an international stock sale, indicating that the long-discussed goal of a second offering on a foreign bourse had been shelved for the time being.
Even for the domestic listing, there are also reports the firm is struggling to get institutional investors on board amid a bearish outlook for the energy sector and questions over the company’s transparency and governance.
Norway’s sovereign wealth fund, the largest in the world, has said it does not plan to invest in Aramco, a Norwegian official said.
However, China, the world’s top oil importer, might commit as much as US$10 billion through sovereign wealth funds and other state-owned enterprises, Bloomberg News reported.
Aramco last year posted US$111.1 billion in net profit. In the first nine months of this year, its net profit dropped 18 percent to US$68.2 billion.
Additional reporting by Bloomberg
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