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Preparing For The Aramco IPO

Saudi Aramco is scheduled to release its prospectus this Saturday, and shares will officially start trading on the local Tadawul stock exchange in December. 

Shares are only listed on the Saudi Tadawul exchange, but the Saudis want global investors. At home, it’s one thing: There’s no way Aramco will fail to ‘attract’ local investors because it’s basically a do-or-die setup. Big names are expected to invest, and they will risk a lot to do so. That was the message of the Crown Prince’s earlier purge and arrest of the country’s wealthy. He owns them now. They must invest. At the same time, there are rumors that banks are offering cheap credit to encourage retail investors to get in on this as well.  

For global investors, though, there’s a lot to consider aside from pleasing the prince. For one thing, they’ll have to consider the 18% decline in net profit to $68 billion for the nine months ending in September (compared to the same period the previous year). They will have to weigh this against the fact that despite that decline, Aramco’s income for nine months was still more than Apple’s last year - all year.  

That’s tantalizing. But is it, really? There is a ton of domestic political and geopolitical risk here - the latter most dramatically emphasized with the September 14th attacks on Aramco facilities that laid bare the giant’s vulnerability. 

The…




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