Saudi-Arabia’s state-owned oil company Aramco has received approval for its long-awaited IPO after several delays. The CMA announced on Sunday that Aramco’s application had been approved. Aramco shares will be traded on the Saudi Arabian stock exchange Tadawul.
Saudi Aramco is the world’s largest oil producing company and is considered one of the most profitable companies. The plans for going public have been repeatedly stopped or postponed in recent years.
Estimates of the extent of the IPO vary widely. Crown Prince Muhammad bin Salman, the factual ruler of the kingdom, had hoped for a valuation of the company of more than two trillion dollars. By contrast, analysts assume a maximum of $1.5 trillion.
Even a sale of one percent of low-rated stocks could bring $15 billion to Aramco, while a two percent sale, with a higher valuation, would add $40 billion. This would break Aramco’s record for the biggest IPO since 2014, when the Chinese trading platform Alibaba holds $25 billion in revenue.
A timetable for the further steps of the IPO was not mentioned on Sunday. The Dubai-based leading regional news channel, recently reported, citing insiders, that the first day of trading on the Tadawul Exchange would be December 11. According to the broadcaster, the stock market prospectus will be published on November 10.
The oil giant’s IPO is centered to Bin Salman’s large-scale restructuring of the Saudi economy. The plan called “Vision 2030” aims to make the Islamic country more independent of oil. Originally, the IPO was supposed to take place in 2017, but was postponed a number of times. The revenues are to be invested in new economic sectors.
Aramco wants to occupy an outstanding position in the global energy market, explained managing director Amin Nasser in a communication. “For the past three years we have been responsible for every eighth barrel of crude oil produced worldwide”, Nasser further said: “At the end of 2018, our proven reserves were five times larger than those of the five major international oil companies (IOCs)”, ExxonMobil, Shell, Total, Chevron and BP are considered the five largest of these “super major”.
Saudi Arabia’s oil industry had been severely hit by drone strikes in September. Country’s largest oil refinery was hit in Abqaiq and production volume was reduced to about half of the usual volume. According to OPEC data, production of around 9.8 million barrels (159 liters) collapsed by about 5.7 million barrels a day. As a result, oil prices rose as fast as it had in decades.
According to data from Riyadh, the supply of oil reached soon again, the level of before the attacks, the plans for the IPO according to Aramco were not affected. The attacks were known to the Houthi rebels from neighboring Yemen. US Secretary of State Mike Pompeo directly blamed Iran for the attacks.