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The World's Largest IPO Is Finally Ready To Go

Worlds Most Anticipated IPO

Saudi Arabia’s government is set to officially endorse this week plans to list shares in oil giant Aramco in what would be the world’s largest initial public offering (IPO) ever, the Financial Times reports, quoting people familiar with the plans.  

After the government approval, Aramco’s board is expected to approve the IPO plan before the official announcement of the intention to list expected for October 20, FT’s sources said.

The Saudis are reportedly looking to list as much as 3 percent of the world’s largest oil company on the domestic stock exchange, Tadawul, as soon as next month.

Aramco’s board of directors could give the final approval to the IPO as soon as this week, Bloomberg reported last week, citing people with knowledge of the plans.

Aramco’s board has tentatively planned a meeting with the advisers to the listing around October 17 to review market conditions and feedback from a roadshow for seeking interest from possible anchor investors in the IPO, before approving the share sale, Bloomberg’s sources said.

Over the past two months, Aramco has noticeably accelerated the timeline for the much-hyped listing. A US$2-trillion valuation that the Saudis seek has been one of the sticking points—together with the international venue for the listing and concerns over transparency of Saudi reserves—in the IPO that has been delayed several times already.

Related: Iran President Vows Revenge For Oil Tanker Attack

Amid reports that Saudi Arabia has moved to speed up the listing of Aramco and amid conflicting reports about the impact of the attacks on Saudi oil on what would be the world’s largest IPO ever, one of the latest reports coming out of the Kingdom had it that Aramco is set to announce as soon as October its intention to proceed with the IPO.

Aramco will officially announce its intention to sell shares on the stock market at some point around October 20, people familiar with the planning told Bloomberg at the end of September.

Saudi Aramco will issue the prospectus for its initial public offering before this month’s end, the Wall Street Journal reported last week, citing people familiar with the preparations for the biggest IPO in history.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on October 16 2019 said:
    I am on record having been saying for almost three years on the pages of oilprice.com that the original Saudi Aramco Initial Public Offering (IPO) will never see the light of day for two reasons. The first is persistent question marks about the actual size of Saudi proven oil reserves. The second is the US Congress-approved legislation lifting the immunity on any country whose citizens were involved in 9/11 thus making it possible for victims’ families to sue any government whose citizens were involved in 9/11. Of the 19 terrorists who were involved in 9/11, no less than 15 were Saudi nationals.

    Saudi Kind Salman decided in 2018 to withdraw the IPO altogether justifying his decision by saying that he didn’t want Saudi Aramco to have to disclose its finances and oil reserves. His words spoke volumes about Saudi proven oil reserves.

    I am also on record having been for years sceptical about Saudi declared oil reserves of 266 billion barrels (bb). My latest research and calculations based on Saudi oil production since oil was discovered in 1938 (for which we have figures) and an annual depletion rate of 5%-7% indicate that current Saudi proven reserves could not exceed 55 bb and not 266 bb as the Saudis claim.

    Even if the Congress-approved legislation relating to 9/11 isn't being implemented for the time being, it will remain like a Damocles’ sword hanging above Saudi Arabia’s head thus enabling the United States to blackmail it for money or for a change of policy or both.

    To keep Saudi Crown Prince Mohammed bin Salman’ word, Saudi Aramco can do two things. The first is to issue a smaller petrochemical IPO since would-be-investors could see petrochemical assets like refineries and plans but they can’t verify reserves underground without an international and fully independent audit of Saudi reserves, something Saudi Arabia will never submit to. The second is to list as much as 3% of its shares on the domestic stock exchange, Tadawul. However, the downside to this is that it could overwhelm the domestic stock market and create problems of liquidity with reluctant local buyers having to borrow heavily to pay for the shares.

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

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