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Saudi national oil company Aramco confirmed on Sunday its next IPO, which could be the most important in history, reflecting the will of the crown prince to transform the country's economy, totally dependent on oil.
"Saudi Aramco confirms its intention to enter Tadawul, the Saudi national exchange," the company said on Twitter, after receiving the approval of the Saudi regulator of the financial market.
"It is a significant stage in the history of the company and important progress to implement 'Vision 2030', the kingdom’s master plan for lasting diversification and economic growth," said the president of the Aramco board of directors, Yasir Al Rumayyan, in a statement.
"Vision 2030" is a plan put in place by Crown Prince Mohamed bin Salman to prepare the largest economy in the Arab world for the post-oil era.
Aramco should take 5% of its capital on the stock market, 2% the day it starts trading in Tadawul, sources close to the preparations told the AFP in October.
The planned initial calendar pointed to an exit in two phases: the first in Tadawul, in December, and the second in 2020 in an international stock exchange, according to sources familiar with the case.
However Rumayyan dismissed this calendar this Sunday. "As far as the [international] exit is concerned, we will let you know in due course. At the moment it will be only Tadawul," he said, without specifying the date.
The oil company said its shares will be available to institutional investors, Saudi citizens, foreign residents in Saudi Arabia and citizens of the Gulf countries.
The IPO should value the company at between 1.5 and 1.7 billion dollars, according to a source close to the case, which would be the largest market capitalization in history.
The Saudi stock market fell almost 2% on Sunday after the announcement due to fear that the oil giant will collapse due to the operation, several analysts said.
Aramco, considered the most profitable company in the world, announced in September a net profit in nine months of 68,000 million dollars. The oil company only announces results recently.
In 2018, it had benefits of 111.1 billion dollars, more than the added benefits of Apple, Google and Exxon Mobil.
The IPO was scheduled since 2016 and Prince Mohamed bin Salman expected a capitalization of two billion dollars. But in 2018 he decided to postpone the operation because the capitalization calculated by the bankers, after meeting with potential investors, was lower than that figure.
Later, Aramco, who planned the first part of the IPO last October, decided to postpone it again to December or January.
Last week, the Energy Intelligence specialized publication cited sources according to which Saudi Arabia would be willing to accept a valuation of the company between 1.6 and 1.7 billion dollars.
With regard to valorization, the Saudi authorities must find "a compromise between the preference declared by the crown prince and the realities of the market," said Kristian Ulrichsen, a researcher at the Baker Institute at Rice University in the United States.
"As the process was postponed several times and is part of the crown prince's plan to transform Saudi Arabia, international investors will be very attentive to Aramco's results in the internal [financial] market," Ulrichsen told AFP.
10% of world production
Aramco, which produces about 10% of the world's oil, is considered the country's economic treasure and the pillar of its economic and social stability.
The government is trying to get the rich Saudi families to buy company shares and some commentators even claim that it is a patriotic duty.
Arabia is multiplying efforts to seduce investors, to whom it promises annual dividends of $ 75 billion, according to the Aramco website.
"An important function of the introduction in the local stock market is to project confidence in the company for the international market," Cinzia Bianco, a researcher at the European Council on Foreign Relations, told AFP .
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