Saudi Aramco kick-starts what could be world's biggest IPO, offers scant details

Saudi Aramco kick-starts what could be world's biggest IPO, offers scant details

Saudi Aramco kick-starts what could be world's biggest IPO, offers scant details

Saudi Arabia's state oil company Aramco has launched its initial public offering (IPO), announcing its intention to list the world's most profitable company on the kingdom's domestic stock exchange.

The strikes had threatened to undermine plans for Aramco to make its stock market debut but it has pressed ahead, despite simmering tensions with Iran which has been blamed for the attack. A final price for the stock will be determined in early December, and shares will then begin to be traded on Tadawul.

The IPO of the world's most profitable company is created to turbocharge Crown Prince Mohammed bin Salman's economic reform agenda by raising billions to diversify the kingdom, whose dependency on oil was highlighted by the production impact of the September attacks.

Saudi Arabia's market regulator approved the oil giant's application to list yesterday but did not give a timeframe or say how much Aramco would sell. But the oil giant is expected to complete the listing process next month.

Oil facilities in Saudi Arabia were attacked in September, reminding investors of the potential for instability in the Gulf region.

The attacks targeted the Abqaiq and Khurais plants at the heart of the country's oil industry, causing fires and damage and temporarily shutting down 5.7 million barrels per day (bpd) of production - more than 5% of global oil supply.

"This is a transformational and historic moment for Saudi Aramco", Nasser said.

President and CEO of Saudi Aramco Amin Nasser shakes hands with Aramco´s chairman Yasir al-Rumayyan after a press conference in Dhahran.

In the section titled "IPO Retail Incentive Arrangement", the document sets out the benefits that people living and working in the Kingdom can expect.

Analysts say a $2 trillion valuation, Apple and Microsoft separately for instance are $1 trillion, may be a stretch.

Aramco hasn't publicly revealed compensation details beyond the aggregate figures, which were included in an April bond prospectus.

The Saudi company reported a profit of 111.1 billion dollars for 2018 and 46.9 billion dollar for the first half of 2019.

Saudi Aramco is thought to be worth about $1.2tn (£927bn).

To diversify its oil business, Aramco is expanding in refining and petrochemicals with the aim of nearly tripling its chemicals production to 34 million tonnes per year by 2030 and raising its global refining capacity to 8-10 million barrels per day (bpd) from more than 5 million bpd.

"Aramco also has limited control in output policy, a key part of Saudi Arabia's Opec management".

The sale, which could value the company at up to $1.7 trillion, is the linchpin of Crown Prince Mohammed bin Salman's plan to revamp the economy and wean it off a decades-long dependence on oil.

Despite high production levels, the company's ability to generate funds per barrel of oil produced has been lower than peers.

"Listing Aramco on Tadawul proves its strong position among global markets", he told a news conference.

April 19, 2017 - China gathers state-led consortium that will act as a cornerstone investor in the Aramco IPO, people with knowledge of the discussions tell here Reuters.

March 30, 2017 Saudi Aramco formally appointed JPM, Morgan Stanley and HSBC as worldwide financial advisers for its IPO, sources familiar with the matter tell Reuters.

Why does Saudi want to sell shares in it?

To boost investor appetite, Aramco said it will pay an income tax rate of 20% on its domestic downstream business starting next year, compared with current levies of between 50% to 80%.

Riyadh is looking to list a 1%-2% stake on the Saudi stock market to raise at least $20 billion-$40 billion.

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