Ryad (AFP)
The Saudi financial market regulator gave Sunday the kick-off to the IPO of oil giant Aramco, which could be the largest ever made in the world, indicating having approved the demand for such an operation.
Aramco later confirmed on Twitter its intention to enter the Ryad Stock Exchange.
"The Council of the Capital Market Authority (CMA) has issued its resolution approving the Saudi Arabian Oil Company's (Saudi Aramco) request to divest part of its shares," the regulator said in a statement posted on its website. Internet.
He did not provide the steps of this IPO, but the title trades are expected to start in mid-December in the Saudi market.
This introduction is the cornerstone of a reform program of Crown Prince Mohammed bin Salman, nicknamed "MBS". It should value the company between $ 1,500 and 1,700 billion, the largest capitalization in the world, according to a source close to the record.
In 2018, the strong man of the kingdom had decided to postpone the operation because the capitalization calculated by the bankers, after meetings with potential investors, was below this threshold.
Subsequently, Aramco, which was to launch in October the first part of its introduction, decided to postpone the date to December or January.
According to the source close to the file, the schedule provides for a two-step entry: first on the Saudi local Stock Exchange, the Tadawul, in December, then, in 2020, on an international financial center yet to be defined.
Aramco is expected to sell a total of 5% of its capital, including 2% during its stock market baptism on Tadawul, said earlier this month sources close to the case at AFP.
- Reassure investors -
The IPO of Aramco had been considered since 2016 by the Saudi Crown Prince.
Last week, the Energy Intelligence newsletter quoted sources as saying that they expect the Saudis to accept a $ 1.6 trillion to $ 1.7 trillion valuation.
If this hypothesis is confirmed, it would suggest that the Saudis are ready for a compromise below the amount of 2,000 billion dollars on which the Crown Prince has long insisted.
Regarding the assessment of Aramco, the Saudi authorities must find "a compromise between the declared preference of the crown prince and the realities of the market," said Kristian Ulrichsen, a researcher at the Baker Institute of Rice University to United States.
"As the process has been repeatedly delayed and is an integral part of the Crown Prince's plan to transform Saudi Arabia, international investors will be paying close attention to Aramco's performance on the domestic (financial) market." said Ulrichsen to AFP.
Aramco, which produces about 10% of the world's oil, is the most profitable company in the world and is considered the kingdom's economic jewel and the pillar of its economic and social stability.
Saudi Arabia has redoubled its efforts to seduce investors by promising annual dividends of $ 75 billion, according to the company's website.
Ryad also seeks to encourage wealthy Saudi families to buy stakes in the firm, while some Saudi commentators have sought to portray this investment as a patriotic duty.
"An important function of the introduction to the local stock market is to project trust in the company to the international market," Cinzia Bianco, a researcher at the European Council on Foreign Relations, told AFP.
"This allows Prince Mohammed to show he is keeping his promises and doing what he has to do, a new step to reassure international investors that the IPO will take place after all", added Mr. Bianco.
© 2019 AFP