Saudi Arabia will allow investors to start bidding for shares in Saudi Aramco from 17 November 2019 and the targeted percentage of offer shares allocable to individual investors will be up to 0.5 per cent of the shares.
Saudi Aramco stated that the share sale will be restricted to institutional investors eligible to participate in the book-building process as well as individual investors comprising Saudi Arabian nationals. The final offer price and the number of offer shares to be sold will be determined at the end of the book-building period on 5 December 2019.
According to Saudi Aramco’s prospectus, Tadawul rules prohibit the state-owned energy giant from listing additional shares for six months after the start of trading. Similarly, the Saudi government 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.
While the prospectus includes Saudi Aramco’s profits for the first nine months and details of the company’s operations, it does not include any indication of what valuation the government hopes to achieve. Bloomberg reported that price guidance for the share sale is expected next week, but Saudi Crown Prince be satisfied with a valuation of between $1.6 trillion and $1.8 trillion.
Analysts from 16 banks have offered a valuation on the company, ranging in estimates from $1.1 trillion at the bottom right up to $2.5 trillion and the midpoint was $1.75 trillion.
Saudi Aramco recorded a net income of $68.2 billion in the first nine months compared with $83.1 billion a year ago, the company’s revenue slipped to $217 billion from $233 billion.
The richest Saudis who are considering sizable purchases in Saudi Aramco include the Olayan family and Prince Alwaleed bin Talal.
China, the world’s largest oil importer, is expected to commit as much as $10 billion through sovereign wealth funds and other state-owned enterprises. An investment would be a hedge against rising oil prices and chime with the objectives of Beijing’s ambitious Belt and Road programme.