Saudi Arabia’s state oil company Aramco has launched its initial public offering (IPO), announcing its intention to list the world’s most profitable company, according to a bond prospectus, on the kingdom’s domestic stock exchange. Its prospectus makes it 50% more profitable than Microsoft and Apple.
Saudi Aramco chairman, Yasir al-Rumayyan, expected strong demand from global institutions for Aramco’s IPO, he said at the company’s headquarters in the eastern city of Dhahran.
“Today marks a significant milestone in the history of the company and important progress towards delivering Saudi Vision 2030, the Kingdom’s blueprint for sustained economic diversification and growth,” al-Rumayyan said.
“Since its formation, Saudi Aramco has become critical to global energy supply. With a focused, long-term strategy and staunch governance, Saudi Aramco demonstrates world-class standards of operational performance and financial discipline.
“The company’s strategy is underpinned by long-term, exclusive access to the Kingdom’s unique hydrocarbon resources, which it manages in order to optimise production and maximise long-term value. At the same time, the company seeks to preserve the low carbon intensity of its crude oil production to demonstrate its ongoing commitment to sustainability.”
Saudi Aramco CEO Amin Nasser said the world’s largest oil firm was still the most reliable oil company globally despite being attacked in September. The 14 September strikes had targeted the Abqaiq and Khurais plants at the heart of Saudi Arabia’s oil industry, temporarily shutting down 5.7 million barrels per day of output – more than 5% of global oil supply.
Saudi Aramco said it had earned US$68 billion for the nine-month period that ended September, recording a revenue of US$244 billion and a free cash flow of US$59 billion.
The company will spend the next 10 days talking to investors and sounding out their interest and the price range will follow, he added.
The IPO is designed to fund Mohammed’s ambitious economic reform agenda by raising billions to build non-energy industries and diversify revenue streams.
Aramco has not stated when or how much of the company it would sell, but Reuters reported sources state the oil company could offer 1–2% of its shares on the local bourse, raising as much as US$20–40 billion.
The company said the IPO would be split between institutional and individual investors.
With Aramco likely to list 5% of the company over time (1% locally and 4% on an exchange abroad) at a hypothetical US$1.5-US$2 trillion valuation, the offering could add up to 1.8% to its MSCI Emerging Markets Index representation. This will bring the MENA region’s overall weighting close to 7%, putting it on par with the likes of Emerging Europe, Brazil, South Africa and India, a significant milestone in the evolution of MENA capital markets.
“It is a colossal public offering that could potentially generate more than 10 years’ worth of proceeds raised through IPOs in the country,” Reuters stated.