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Saudi Arabia approves Aramco plans of long-awaited IPO

Nov 03, 2019
2 min read
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Saudi Arabia’s market regulator approved on Sunday Saudi Aramco’s application for a part listing of shares on the local bourse, opening the doors to the largest ever IPO.

“The Capital Market Authority (CMA) Board has issued its resolution approving the Saudi Arabian Oil Company (Saudi Aramco) application for the registration and offering of part of its shares,” the regulator said in a statement.

The company’s prospectus will be published in coming days for shares to start trading in December, according to The Wall Street Journal. 

Saudi Arabia’s Crown Prince Mohammed bin Salman on Friday agreed that the initial public offering of state oil giant Aramco will be announced, with the intention to list 1-2 per cent on Saudi Stock Exchange or Tadawul. Riyadh plans to raise between US$20-40 billion at a desired valuation of $2 trillion. A secondary, international listing could follow later.

If the listing raises more than $25 billion, Aramco will become the largest IPO in the world, crossing Alibaba’s $25 billion listing in 2014.

Saudi Aramco is the world’s largest oil exporter and also the most profitable company - it reported a first-half net profit of $46.9 billion, dwarfing the likes of Apply, Google and Amazon in profits and size.  In 2018, it made a profit of $111.1 billion on revenues of $355.9 billion.

Aramco’s listing is the cornerstone of the Crown Prince’s plans to diversity the Kingdom’s economy away from oil-dependency through its strategic Saudi Vision 2030.

The IPO plans initially announced in 2016 had faced several hurdles and changes, moving away from the ambitious plans of listing 5 per cent on an international stock exchange at a company valuation of $2 trillion, which has since been contested by analysts to be closer to $1-1.5 trillion.  

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