Saudi Arabia Considers Selling Cheap Aramco Shares To Locals

Oil giant Saudi Aramco is reportedly considering offering shares to citizens of Saudi Arabia as it prepares for an initial public offering that could be the biggest the world has ever seen.

Quoting sources ‘familiar with the matter’, Bloomberg reported that Aramco has been talking about how to structure the IPO so that Saudi retail investors could get in on the deal cheaper than through international exchanges.

No details on the local shares structure have been released, nor has Aramco commented on the plan officially.

Bloomberg notes that the Kingdom has traditionally offered shares in government-owned companies for about US$2.67 each in an effort to redistribute wealth among the local population.

A final decision on the share pricing has also not been made yet. Aramco could be valued at more than US$2 trillion in the sale.

Last week, Reuters reported that Saudi officials were debating whether Aramco should be listed as an industrial conglomerate or a specialized international oil company. Reuters quoted an anonymous source as saying that the choice is between making Aramco a pure oil and gas company or a conglomerate and expand its role in petrochemicals and other sectors.

Senior-level officials are now concerned with the complications this would create in valuing the state-run corporation ahead of its partial sale.

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Under consideration will be Aramco venues listed in the U.S., the UK and Asia. Earlier this week, the Wall Street Journal said that the New York Stock Exchange was the favorite for the Aramco listing. London and Toronto’s exchanges are also being considered, but with less zeal, the Journal said, citing anonymous sources.

As far as Asia is concerned, the Saudis are said to be in talks with stock exchanges, but WSJ predicts that they are not likely to do an IPO there.

The Aramco IPO will potentially raise billions of dollars to support the Kingdom as it transitions from an energy dependent economy to one with more diverse prospects by the year 2030.

By Charles Kennedy for Oilprice.com

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