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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Aramco’s 658 Page Prospectus Fails To Answer The $2 Trillion Question

The number of shares, the price and date of the listing remain shrouded in mystery today, even after Saudi Aramco released its long-awaited IPO prospectus.

What the 658-page document does say is that Aramco will list just 0.5 percent of its total stock to individual investors, and that the listing will begin on November 17 and end on December 4. This should imply Aramco shares will start trading on the Tadawul exchange in early December. This is also when Aramco will make public the price per share and the number of shares it will offer up for sale.

Investors, the prospectus also said, have until November 28 to request shares.

The Saudi state oil company has been making strides in its preparation for going public after months of uncertainty and doubts whether it would list at all and if it does, which overseas exchange it will choose. For now, the listing will be on Tadawul only, with the international one planned for a few years later, according to comments from Riyadh officials.

The 0.5 percent Aramco will offer in early December as per its schedule is a small portion of the 5 percent it plans to list, meaning the bulk of the shares will target institutional investors. At one point, there was even talk of doubling this to 10 percent, possibly based on doubts about the $2-trillion valuation of the company that Crown Prince Mohammed is aiming for. Related: Why Qatar Is Better Off Without OPEC

Calculations of Aramco’s value from various banks put it in a rather large range of between $1.2 trillion and $2.3 trillion.

Last month, Aramco reported a net profit of $68 billion for the first nine months of the year at the same time as it announced an intention to float on the local stock exchange. In the same statement, the company said it planned to distribute $75 billion in dividends next year.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on November 11 2019 said:
    Aramco’s 658-page prospectus has failed completely to answer the one question would-be-investors were waiting for, namely the basis on which the $2-trillion valuation of Aramco was calculated and therefore the real size of Saudi proven oil reserves.

    Saudi Arabia will never submit its reserves for an international and independent audit now or ever and the International IPO of Saudi Aramco will never see the light of day now or ever either and therein lies the problem for investors.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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