Saudi Aramco has kick-started its initial public offering (IPO), announcing its intention to list on Tadawul to diversify and create the world’s most valuable listed company—in what could be the world’s biggest listing, reportedBloomberg.
The state-owned energy company’s shares are likely to start trading in December 2019. The Kingdom’s Capital Market Authority approved Saudi Aramco’s offering, more than three years after Crown Prince Mohammed bin Salman first raised the idea and just three weeks after a plan to launch the share sale was abruptly shelved.
Saudi Aramco, which pumps about 10 per cent of the world’s oil, generated the most profit of any corporation last year with net income of $111 billion—more than Apple, Google’s parent Alphabet and Exxon Mobil combined.
The company was targeting a $2 trillion valuation—more than double that of Apple—but the Kingdom is now ready to accept a valuation of $1.6 trillion to $1.8 trillion to ensure the IPO is a success.
The sale is key to Prince Mohammed’s Vision 2030 plan to overhaul the economy and end Saudi Arabia’s reliance on oil exports. The proceeds from the IPO will boost the firepower of the Kingdom’s sovereign wealth fund, which already has investments in funds managed by Blackstone Group and SoftBank Group.
More than 20 have been mandated, with the top roles going to firms including Citigroup, Goldman Sachs Group and JPMorgan Chase & Co. To get the deal done, Saudi Aramco’s bankers will need hefty contributions from the Kingdom’s wealthiest families.
Saudi Aramco must also contend with the strengthening global movement against climate change that is targeted the world’s largest oil and gas companies. Many fund managers are concerned the shift away from the international combustion engine—a technology that drove a century of steadily rising demand—means consumption will peak in the next two decades.
The oil company could be listed before the end of the year, in which case the world’s most valuable company will no longer be traded in the US but on Tadawul. The exchange lifted restrictions on foreign investors four years ago.
Financial statements for the first six months of the year showed that Saudi Aramco’s revenue and profit was higher than any other company’s. The company also gives almost all of it back to the government through a mixture of taxes, royalties and dividends.