Saudi Aramco Announced World's Biggest IPO

Saudi Aramco announced that it will list on the Saudi Stock Exchange, or Tadawul, in Riyadh in what could end up being the biggest initial public offering the world has ever seen.

The long-awaited announcement comes around four years after the idea of listing the Saudi Arabian government-owned upstream oil giant was first floated. Saudi Arabia's Crown Prince Mohammed bin Salman has been pushing to diversify his country's economy away from oil and the Saudi Aramco initial public offering is seen as a key step in that direction.

Saudi Aramco, the world's most profitable company, did not provide details of the planned offer. "The price at which all subscribers in the offering will purchase shares, the number of shares to be sold, and the percentage of the shares to be sold will be determined at the end of the book-building period," the company said in a release.

According to some reports, the prospectus for the offering will be issued by the company on Nov 9.

Some international media reports said that analysts expect Saudi Aramco to be valued between $1.5 trln and $1.7 trln. The Saudi Arabian government has been pegging Saudi Aramco's worth at $2 trillion. In the past, plans for the offering were delayed on the issue of valuation. The fact that the initial public offering has now been announced suggests that the Saudi Arabian government is now willing to accept a valuation lower than $2 trillion.

Saudi Aramco was earlier expected to offload 5% on two exchanges, with a first listing of 2% on a Saudi Arabian exchange, followed by 3% on an overseas exchange. The company, however, did not mention any plans for an overseas listing in its release.

If the company is able to rake in over $25 bln through the public offering, it will be the biggest offer since that of China's Alibaba in 2014.

The listing on the main market of Tadawul will be open to institutional investors as well as Saudi individuals, foreigners residing in Saudi Arabia and other Gulf citizens, the company said.

"Citigroup Saudi Arabia, Credit Suisse Saudi Arabia, Goldman Sachs Saudi Arabia, HSBC Saudi Arabia, J.P. Morgan Saudi Arabia Company, Merrill Lynch Kingdom of Saudi Arabia, Morgan Stanley Saudi Arabia, NCB Capital Company and Samba Capital & Investment Management Company have been appointed by the company as joint financial advisors," Saudi Aramco said.

Saudi Aramco's impending IPO could also have an impact on its planned investments in India. The company is partnering Indian public sector refiners and Abu Dhabi National Oil Co on a 60-mtpa mega refinery project on India's west coast, apart from looking at picking up 20% stake in Reliance Industries Ltd's oil-to-chemicals business.

Saudi Aramco is also participating in India's strategic petroleum reserves project and is keen to enter the fuel retail segment in the country. There is speculation that the company could also be in the running for buying the Indian government's stake in public sector refiner Bharat Petroleum Corp Ltd.