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The Saudi Aramco IPO May Be Bigger Than First Thought

Aramco Oil

Information about Saudi Aramco IPO advisors to be released soon

Saudi Aramco plans to sell shares in its entire business, the company’s CEO Amin Nasser said. When the IPO was originally announced, there was speculation that the kingdom might only seek to sell shares in the downstream operations of the world’s biggest oil company.

The company plans to list shares on the Saudi stock market and is also considering foreign bourses in London, Hong Kong and New York, according to Nasser. Aramco hopes to sell approximately a 5 percent stake in the company, reports Bloomberg.

Is it the most valuable company on the planet?

Valuations on the company vary as the Saudi-owned integrated oil company only releases select information, but analysts have put the worth of the company between $1 and $10 trillion, potentially making it the most valuable company on the planet. Saudi Aramco’s reserves are more than 12-times greater than those of ExxonMobil (ticker: XOM), its closest Western oil competitor in terms of size.

(Click to enlarge)

“We need to do a lot of internal work to prepare for this listing,” Nasser said. “We are listing a part of the entire company, and not just downstream,” Nasser said. “There are no obstacles for the IPO of Aramco,” he added.

“We are one of the few companies that is still investing. We will continue to invest in our core business. Our rigs are increasing, and our overall activities are increasing.” Related: Billions Of Barrels Of Undiscovered Oil May Lie Under Barents Sea

The company will announce a list of investment banks and consultants “very soon” its CEO said. Many Western investors have been advised against the deal, however, due to the opacity of the company, and fear that it could become another version of Petrobras, Brazil’s state-owned oil company, currently the most in-debt oil company in the world.

Looking for Money with J.P. Morgan

Bloomberg and other media have reported for the past few months that Saudi Arabia is in America with J.P. Morgan looking for money. Back in May 2016, it was thought that the Kingdom would raise $15 billion. On October 3, 2016, Doha Bank CEO Raghavan Seetharaman told Bloomberg Markets Middle East: “They have been pronouncing for borrowing for nine months, and they have still not executed, I’m surprised. They should have gone and borrowed when they knew they would have a budget deficit.”

Seetharaman said the austerity measures now undertaken by Saudi Arabia are historic: “The Saudi economy is straining, the banking sector is struggling with liquidity pressure and lending has slowed. As a result, the kingdom is undertaking austerity measures, including cuts to public-sector pay, that are not really required.”

Further complicating the bond issuance is how the U.S. Congress roundly rejected President Obama’s veto of the 9/11 Legislation.

By Oil and Gas 360

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  • Amvet on October 15 2016 said:
    My view is that the Saudi oil reserves are much less than claimed and the stock sale will come before the reserve shortage is known.

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