RIYADH (AFP) – Saudi Aramco said it would start taking bids from investors on November 17 in a highly anticipated stock offering, as it released a prospectus that did not disclose the size of the sale or the pricing range.
The 658-page document said the final share price would be determined on December 5, a day after subscriptions close, in what is expected to be the world’s biggest initial public offering.
After years of delays and false starts, Aramco officials last week announced a share sale on the Riyadh stock market for the world’s most profitable company, which pumps 10 per cent of global oil supply.
The prospectus, released just before midnight last Saturday, said the state giant would sell up to 0.5 per cent of its shares to individual retail investors but that it had still not decided on the percentage for larger institutional buyers.
Saudi investors appear keen on the prospect of owning a piece of the company, seen as the kingdom’s economic crown jewel, despite concerns over the future of oil and the firm’s valuation and governance.
The company said it had hired a host of international banking giants including Citibank, Credit Suisse and HSBC as financial advisors and book-runners.
In its push for transparency, the secretive company’s prospectus also highlighted risks including the potential for “terrorist” attacks and the possibility of anti-trust legislation.
It also acknowledged that climate change concerns could reduce demand for hydrocarbons.
“Disclosure (and) transparency combined with the global research and analysis that it will provoke is in itself of major value to the kingdom and the company,” said a Saudi analyst Ali Shihabi.
However, key details were missing from the prospectus, including the company’s valuation and how much Aramco expects to raise from the IPO.
“This lack of clarity in the prospectus shouldn’t alarm us as it’s a book building exercise,” said Nasser Saidi, another analyst.
“And let’s be clear, Saudi will do whatever it takes to make this IPO successful because so much hinges on it,” Saidi told Bloomberg TV.
The share sale appears unlikely to see Aramco hit a USD2 trillion valuation for the company that de facto ruler Crown Prince Mohammed bin Salman had initially hoped for.
Investment research firm Bernstein estimates the valuation could fall within a range of USD1.2 and USD1.5 trillion.
Based on a USD1.5 trillion valuation, a two per cent stake sale would raise Aramco USD30 billion.
That would still make it the world’s biggest IPO, eclipsing Chinese retail giant Alibaba’s USD25 billion listing in 2014.
Saudi Arabia is pulling out all the stops to ensure the success of the IPO, a cornerstone of Prince Mohammed’s ambitious plan to steer the economy away from oil by pumping tens of billions of dollars into a host of mega projects and non-energy industries.
The government has reportedly pressed wealthy Saudi business families and institutions to invest, and many nationalists have labelled it a patriotic duty.
Aramco had initially been expected to sell a total of five per cent on two exchanges, with a first listing of two per cent on the kingdom’s Tadawul bourse, followed by a three per cent listing on an overseas exchange.
But the firm has said there are no current plans for an international stock sale, indicating that the long-discussed goal of a second offering on a foreign bourse had been shelved for the time being.