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Money Managers: This Is The Maximum Value Of The Aramco IPO

Aramco Pipeline

Saudi Aramco is worth no more than US$1.5 trillion, a Bloomberg News poll of money managers showed on Friday, two days before the Saudi oil giant is set to announce a price range for the world’s biggest initial public offering (IPO) ever.  

According to 40 percent of 24 investors surveyed by Bloomberg, Aramco’s value is between US$1.2 trillion and US$1.5 trillion.

The high end of this estimate is still US$500 billion below the coveted US$2 trillion valuation, on which Saudi Crown Prince Mohammed bin Salman has insisted since he announced plans for Aramco to go public more than three years ago.

In recent weeks, the Saudis have been reportedly signaling they could be willing to compromise on the valuation and banks now look to hit a valuation of US$1.6 trillion-US$1.8 trillion.

Saudi Aramco’s prospectus of 658 pages published this past weekend was very scarce on details. The number of shares, the price and date of the listing remain shrouded in mystery, even after Aramco released its long-awaited IPO prospectus.  

The book-building process is set to start this coming Sunday, and 11 out of the 24 investors polled by Bloomberg will wait to see the official price range announcement before deciding if they will invest in the world’s largest oil firm.

In what could be just days ahead of the most-anticipated IPO ever, investment banks continue to give enormous ranges in their low and high estimates of how much Aramco is really worth.  

Morgan Stanley is the latest bank to have put a massive US$1 trillion gap between the low and high estimates of Saudi Aramco, Bloomberg reported earlier this week, citing a presentation it has seen.

Nearly all banks have huge gaps in their low-end and high-end valuations. The valuations from 16 banks that have come up with estimates range from as low as US$1.1 trillion to as high as US$2.5 trillion, Bloomberg says, quoting people who have reviewed all estimates. The midpoint of the banks’ valuation is US$1.75 trillion.  

By Tsvetana Paraskova for Oilprice.com

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  • Heidi Peterson on November 15 2019 said:
    The federal reserve spent that much bailing out banks for the last 75 days. And what capital backs them? This is not thought out.

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