In a few days’ time, the prospectus for Saudi Aramco will be published, setting in motion the historic initial public offering (IPO) process for the flotation of a portion of the energy giant.
It’s a flotation that will see the Dhahran-based petrochemical behemoth list an estimated 3 per cent of its shares first on the domestic Saudi Tadawul exchange, with another similar portion to follow on an as yet to be determined international bourse.
Make no mistake, this IPO is highly consequential, one that will change the very nature of the energy giant itself, transform Tadawul — with an immediate knock-on effect for all regional bourses — and one that could raise an estimated $60 billion (Dh220 billon) overnight.
Aramco will be the dominant issue — it will have the immediate attention of every trader and fund manager, and it will bring a positive boost to portfolios — and to Saudi Arabia that will benefit from this sizeable listing
More importantly, it’s a key cornerstone in Saudi Arabia’s strategic plans to transform and modernise its national economy. As Saudi Crown Prince Mohammad Bin Salman has repeatedly emphasised and detailed in the kingdom’s Vision 2030 plan, Saudi Arabia is intent on diversifying its economy and ending the decades-long dependence on the energy sector.
The Aramco IPO is a significant step in this process, one that is reshaping the kingdom’s economy, bringing new jobs and opportunities to its people, bringing a new era of social change in lockstep with the policies of diversification.
This is a measure that offers individuals, funds and institutional investors a chance to buy into the world’s most profitable company. By even offering a small percentage of its size to investors on open markets in the kingdom and elsewhere, it brings an immediate positive injection — literally a quantum leap in value for bourses and every portfolio with a Saudi Aramco stake.
Certainly, investment analysts have pored over the fine details and debated the possible initial pricing levels — the reality is that by next week in Riyadh and soon at another major bourse, Aramco will be the dominant issue — it will have the immediate attention of every trader and fund manager, and it will bring a positive boost to portfolios — and to Saudi Arabia that will benefit from this sizeable listing.
Saudi Aramco is unique. It will remain mostly state-owned but with those who take up the IPO gaining a piece of a company with access to prolific and proven oil reserves, a giant refining, pipeline and delivery network of immediate and strategic global significance, and low per-barrel production costs. Simply put, this is as good as it gets.
