20191103_aramco
The logo of Aramco is seen as security personnel stand before the start of a press conference by Aramco at the Plaza Conference Center in Dhahran, Saudi Arabia November 3, 2019. REUTERS/Hamad I Mohammed Image Credit: Reuters

Highlights

  • Valuation below Saudi crown prince's $2 trillion
  • It could still be world's biggest IPO if priced at top
  • Aramco does not plan to market its domestic IPO abroad-sources  
  • Float is centrepiece of plan to diversify away from oil 

Dubai: Saudi Aramco has set a price range for its listing that implies the oil giant is worth between $1.6 trillion to $1.7 trillion, below the $2 trillion that the Saudi crown prince had previously targeted, making it potentially the world’s biggest IPO.

Aramco said on Sunday it plans to sell 1.5% of its shares or about 3 billion shares, at an indicative price range of 30 riyals ($8.00) to 32 riyals, valuing the initial public offering (IPO), as much as 96 billion riyals ($25.60 billion) at the top end of the range.

The price range is below the $2 trillion that the Saudi crown prince had previously targeted.

  • Price range: 30 riyals to 32 riyals per share
  • Pricing at lower end of range would raise $24 billion
  • Aramco will publish the final price and thus valuation on Dec. 5

The share sale is expected to be a huge hit among Saudi citizens who are being offered 0.5% of the company.

Retail investors have until Nov. 28 to sign up for the IPO while institutional investors can subscribe until Dec. 4, with company management going on marketing roadshows this week.

The roadshow for the offering will formally kickoff on Sunday morning with Aramco officials meeting potential investors at the King Abdullah Petroleum Studies and Research Center in northern Riyadh, according to a person with knowledge of the meeting.

Aramco earned net income of $68.2 billion in the first nine months compared with $83.1 billion a year ago.

$68.2b

Aramco's net income in the first nine months of 2019

Revenue slipped to $217 billion from $233 billion.

Aramco could just beat the record-breaking $25 billion raised by Chinese e-commerce giant Alibaba (BABA.N) when it made its stock market debut in New York in 2014.

No marketing abroad

Aramco does not plan to market its domestic IPO abroad, three people familiar with the matter said, which suggests international roadshows will not take place.

"This will put the burden of the deal on local and regional banks," one of the three people said.

"This means most of the investors will participate as Qualified Foreign Investors in a Saudi transaction," another one of the people said.

Aramco finally kicked off its IPO on Nov. 3 after a series of false starts. Prince Mohammed, who had floated the idea of the listing four years ago, is seeking to raise billions of dollars through the deal to invest in non-oil industries and create employment.

On one hand, Aramco is the world's most profitable company with a planned dividend of $75 billion next year, more than five times larger than Apple's payout, which is already the biggest of any S&P 500 company.