The Saudi Aramco IPO: Here’s What Investors Say

The global financial market is awaiting on Sunday the historic launch of the world's largest oil company with the start of the IPO in a part of the capital of the Saudi Arabian Oil Company (Aramco), amid the stimulus of Saudi and foreign investors for the price of the highest band to start to participate in the shares of «Saudi Aramco», the most important company in the country.

The announced timetable showed that the offering period for individuals and institutions and the construction of the order book starts on the 17th of November (November), which will expire on the fourth of December (December) next to the institutions segment, while the subscription of individuals will close on the 28th of this month.

The poll of 24 money managers By Bloomberg News, more than 40% have set the company's fair range between $ 1.2 trillion and $ 1.5 trillion. This is less than the figure of about $ 1.7 trillion, and it is said that Crown Prince Mohammed bin Salman is ready to accept now, after reducing the original overall target of $ 2 trillion.

The company said in a newsletter recently announced that the price of the final offering and the percentage of shares offered will be determined after the completion of the order book construction phase, in the meantime individuals and institutions, Saudis and foreigners, will subscribe to the upper limit of the price range specified by the institutions subscribed in the process of building a record The orders are expected to be announced as soon as the subscription begins.

The company said earlier that its target for individuals is to allocate a maximum of 0.5 percent of the total shares of the company to the individual underwriting, while the number of shares of the company 200 billion shares, capital of 60 billion riyals ($ 16 billion), to be the total expected Individuals have one billion shares.

The prospectus stresses that there is no minimum or maximum number of IPOs that can be subscribed by subscribed institutions, while the minimum subscription for individuals is 10 and there is no maximum, in an expected move to raise between $ 20 and $ 40 billion, according to the prospectus. For unofficial predictions. According to the company, the IPO surplus will be refunded if it exists no later than the 12th of next month.

Saudi Aramco, the largest exporter of crude oil in the world, comes amid many priorities. For the first time, a stock is offered on the Saudi stock market without specifying its nominal value. Individual subscription will be for 10 days while institutions will take 14 working days.

One of Saudi Aramco's priorities is that it is among all IPOs on the Saudi stock market that any non-Saudi natural person residing in the kingdom can subscribe to.

Depending on the size of the IPO, Saudi Aramco's largest IPO will not be on the Saudi market but even in the history of the global offering, with the 2014 IPO of Alibaba expected to exceed $ 21.7 billion ($ 81.6 billion). Rial).

Initial forecasts suggest that Saudi Aramco's IPO will surpass the largest number of subscribers in a single IPO listed on the local stock market by Emaar the Economic City by 10 million subscribers in 2006. Observers believe that the Aramco IPO will see widespread public and foreign participation. For the company's reputation and value and the desire of investors to own shares in the largest oil company in the world.

The Saudi Aramco IPO will surpass the IPO of National Commercial Bank, which took place in October 2014 and is the largest in the domestic market in terms of receipts of 22.5 billion riyals ($ 6 billion). The Saudi stock market has witnessed throughout the history of huge offers, but does not reach the level of the market witnessed on Sunday, represented in the initial offerings and capital increase.

Leading the IPO in terms of volume and value, the National Commercial Bank's IPO in 2014 in which 500 million shares were offered, while the capital of Riyad Bank in 2008 witnessed an increase of 13.1 billion riyals ($ 3.4 billion). 10.5 billion riyals ($ 2.8 billion) on 1 billion shares.

The company recently pointed out its value added globally as the cheapest oil producer with an average crude oil production cost of 10.6 riyals ($ 2.8) per barrel of oil equivalent in 2018, compared to the cost of production data in the five major international oil companies.

She pointed out that the average capital expenditure incurred by the company in the exploration and production sector last year amounted to 17.7 riyals ($ 4.7) per barrel produced from oil equivalent, noting that its reserves of crude oil and condensate amounted to 201 billion barrels and 25 billion barrels of natural gas liquids. And 185 trillion standard cubic feet of natural gas.

On the other hand, the Reuters news agency said that the international rating companies and indices revealed to them the acceleration of the inclusion of «Aramco» in its indexes in a maximum period of the end of December.

According to documents seen by Reuters, M is likely to accelerate. S. C. A, the world's largest market index firm, which is being tracked or used as an index by funds with trillions of dollars of assets around the world, to include the newly listed oil company Aramco but declined to comment on Aramco.

FTSE Russell and Standard & Poor's Dow Jones began incorporating Saudi stocks into their emerging market indices in March. S. C. The Saudi bourse, to its Emerging Markets Index in August, weighed 2.8 per cent, while briefing its clients, Standard & Poor's - Dow Jones, that the company is big enough to accelerate its inclusion in its global benchmarks. The minimum market capitalization adjusted in light of free circulation is at least $ 2 billion.

According to documents seen by Reuters, M is likely to accelerate. S. C. The world's largest market index firm, which is being tracked or used as an index by funds with trillions of dollars of assets around the world to include the newly listed oil company Aramco, has declined to comment on Aramco.

FTSE Russell and Standard & Poor's Dow Jones began incorporating Saudi stocks into their emerging market indices in March, while M&D added. S. C. Saudi Arabia's stock exchange index rose to 2.8 per cent in August, while S&P - Dow Jones briefly noted that the Saudi company is big enough to accelerate its inclusion in its global benchmarks based on the minimum market capitalization adjusted in light of Free trading at least two billion dollars.

Standard & Poor's is expected to exclude the requirement that 10 per cent of shares be traded to investors as Aramco will only offer less than 5 per cent, pointing out that the Index Committee has reviewed this situation and decided that given the expected size and liquidity of this IPO, Saudi Aramco will be excluded from External Availability Rule If all other benchmark criteria are met to accelerate the IPO's inclusion in the Dow Jones Standard & Poor's global benchmarks.

Source: Aramco