Aramco's 658-Page Prospectus Fails To Answer The $2 Trillion Question

Authored by Irina Slav via OilPrice.com,

The number of shares, the price and date of the listing remain shrouded in mystery today, even after Saudi Aramco released its long-awaited IPO prospectus.

What the 658-page document does say is that Aramco will list just 0.5 percent of its total stock to individual investors, and that the listing will begin on November 17 and end on December 4. This should imply Aramco shares will start trading on the Tadawul exchange in early December. This is also when Aramco will make public the price per share and the number of shares it will offer up for sale.

Investors, the prospectus also said, have until November 28 to request shares.

The Saudi state oil company has been making strides in its preparation for going public after months of uncertainty and doubts whether it would list at all and if it does, which overseas exchange it will choose. For now, the listing will be on Tadawul only, with the international one planned for a few years later, according to comments from Riyadh officials.

The 0.5 percent Aramco will offer in early December as per its schedule is a small portion of the 5 percent it plans to list, meaning the bulk of the shares will target institutional investors. At one point, there was even talk of doubling this to 10 percent, possibly based on doubts about the $2-trillion valuation of the company that Crown Prince Mohammed is aiming for.

Calculations of Aramco’s value from various banks put it in a rather large range of between $1.2 trillion and $2.3 trillion.

Last month, Aramco reported a net profit of $68 billion for the first nine months of the year at the same time as it announced an intention to float on the local stock exchange. In the same statement, the company said it planned to distribute $75 billion in dividends next year.