Saudi Aramco has set a price range for its listings which implies the oil giant is worth between $ 1.6 trillion to $ 1.7 trillion, under two trillion dollars targeted by the Saudi crown prince, but still making it potentially an initial public offering the biggest in the world.
Aramco said on Sunday that it plans to sell 1.5 percent of its shares or around three billion shares, at an indicative price range of 30 riyals ($ 8.00) to 32 riyals ($ 8.53) each – appreciating an IPO of 96 billion riyals ($ 25.60) bn) at the top end of the range.
If valued above, the deal could only beat the $ 25 billion record-breaking set by Chinese e-commerce giant Alibaba in its 2014 stock market debut in 2014.
Aramco's float is the center of the Crown Prince Mohammed bin SalmanPlans to diversify the world's top crude oil exporters away from oil.
Aramco does not plan to market its domestic IPO overseas, said three people familiar with the matter, which showed an international roadshow would not take place.
"This will place the burden of the agreement on local and regional banks," said one of three people.
"This means that most investors will participate as qualified foreign investors in Saudi transactions," said one person.
Aramco finally started its IPO on November 3 after a series of false starts. Crown Prince Mohammed, who had floated the idea of listing four years ago, sought to raise billions of dollars through agreements to invest in non-oil industries and generate employment.
But the investment world is still trying to decide what the value of the famous secret company is. Analysts from banks working on the Riyadh bourse have projected a broad valuation range for Aramco between $ 1.2 trillion to $ 2.3 trillion.
On the one hand, Aramco is the most profitable company in the world with planned dividends of $ 75 billion next year, more than five times more than Apple's payments, which is already the largest of any S&P 500 company.
On the other hand, this is a bet on oil prices at a time when global demand is expected to slow down from 2025 because measures to reduce greenhouse gas emissions are launched and the use of electric vehicles is increasing.
A risky bet?
The deal is also fraught with political risks, because the Saudi government – which relies on Aramco for most of its funding – will continue to control the company. Prince Mohammed's reputation was tainted by the murder of Saudi journalist Jamal Khashoggi last year.
In addition, the Aramco oil plant is targeted on September 14 in an attack that initially halved production. The company said the strike would not have a material impact on its business.
The sale of shares is expected to be a big hit among Saudis who are offered 0.5 percent of the company.
Al Jazeera's Economic Editor, Abid Ali, said many of the country's billionaires, some of whom were detained by Saudi authorities at the Ritz Carlton Riyadh hotel in an anti-corruption crackdown in 2017, might also become big investors when shares are sold.
"At that level, it will be a success, because on the day the shares will be sold, Saudi pension funds, investment funds, will take the remaining shares," Ali said.
But, he said, international investors stayed away.
"There are various ways to assess Saudi Aramco. There are uses of oil prices, free cash flow, and dividends. And in most of these steps, mathematics does not accumulate. And many international investors do not like to be passengers in cars being driven by Saudi authorities. , "he added.
Retail investors have until 28 November to register for an IPO while institutional investors can subscribe until 4 December, with company management to conduct a marketing roadshow this week.
The Aramco listing means a year-end rush for the equity market with Alibaba currently accepting orders for Hong Kong listings which is expected to increase to $ 13.4 billion for online retailers.
The listing in Riyadh came after initial hopes for a five percent IPO on domestic and international exchanges were destroyed last year amid an over-valuation debate and where to list Aramco abroad.
Aramco said the IPO schedule was delayed because it began the process of acquiring a 70 percent stake in the petrochemical producer Saudi Basic Industries Corp.
Al Jazeera and the news agency