Saudi Aramco has set the final offer price of its initial public offering at the top end of the range, three sources with knowledge of the decision told Reuters hours before the official Saudi announcement expected later on Thursday.
If priced top-of-the range, Aramco’s IPO will be the biggest listing ever and make the Saudi oil giant the world’s largest listed firm by market capitalization.
Aramco has set an indicative price range of 30-32 Saudi riyals, (US$8-$8.52), per share, in its long-awaited IPO. The upper end of the pricing range would give the company a total value of some US$1.7 trillion. If Aramco does price the shares at the top end of the range, it would generate US$25.6 billion from the IPO, beating the US$25-billion IPO of Alibaba on the New York Stock Exchange in 2014.
Saudi Aramco is expected to announce its final offer price later on Thursday, while it has declined to comment for Reuters and Financial Times on the pricing decision before that.
Saudi Arabia will be offering up to 0.5 percent in Aramco to retail investors, while in total the Kingdom plans to list 1.5 percent of the company on the Saudi stock exchange, the Tadawul.
Although the US$1.7 trillion valuation at pricing at the top of the range would make Aramco the most valuable listed company in the world, the valuation will still be US$300 billion short of the coveted US$2-trillion valuation that Saudi Crown Prince Mohammed bin Salman has sought for years. Related: Hedge Funds Are Quietly Piling Into Oil
Saudi Arabia also has to rely on domestic interest in its oil giant, and possibly on large institutional investors from its Persian Gulf friends, as foreign fund managers have not been too keen to invest in the world’s most profitable oil company.
The pricing at the upper end of the indicative range could be a risk to Aramco’s shares later, and some banks have advised Saudi Arabia to aim for the middle of the range to encourage higher share prices after the listing.
“The banks advised the client to play it safe,” a source close to the pricing process told FT.
By Tsvetana Paraskova for Oilprice.com
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