DUBAI – Aramco’s bidding range will be announced on Sunday amid reports of stalling foreign interest, although the privatization of the Saudi company is still expected to be the world’s largest initial public offering (IPO).
Institutional investors will have a book-building period between Nov. 17 and Dec. 4, while the IPO offer for individual investors will run from Nov. 17-28.
That said, the final offer price is set to be announced after Dec. 4.
The Aramco shares will only be listed on Saudi Arabia’s capital exchange – Tadawul; a young platform that was only established in 2007.
The company is yet to announce the percentage of the listed stock; however, in a 600-page prospectus published a week ago, they said the target stock for retail and individual investors was 0.5 percent.
Saudi Arabia had hoped for an initial international valuation of $2 trillion but a number of financial observers have pointed to a more conservative estimation of between $1.3 trillion-$1.6 trillion.
Recent attacks on Aramco facilities have raised concerns over the kingdom’s ability to protect its oil infrastructure and could influence how foreign investors approach the IPO.
However, Chairman of Aramco and Governor of the Saudi Arabian sovereign wealth fund, Yassir al-Rumayyan, told the Saudi Al Arabiya news channel that investors would come from “anywhere in the world.”
The prospectus named J.P. Morgan, BofA Merrill Lynch, Deutsche Bank, Credit Agricole CIB, EFG Hermes, Morgan Stanley, AlRajhi Capital, Santander, and First Abu Dhabi Bank; among a list of other bank entities as underwrites.
These banks have been working to attract investors for the IPO.
Saudi officials have been traveling abroad in recent months in a bid to shore foreign interest, including in China and Russia.
“It will require more transparency and those partners will have a say,” said Robin Mills, CEO of the Dubai based analysis firm Qamar Energy.
The company said that the board intends to “declare aggregate ordinary cash dividends” of at least $75 billion in 2020, in addition to any potential special dividends.
Through their prospectus, they reiterated that shareholders will be paid prior to the government to ensure the delivery of the amounts specified.
The remaining dividends will be then given to the government.
S&P Dow Jones said in a statement that Aramco will remain “extremely profitable” in all scenarios but warned of some structural challenges, including an “impending peak demand.”
They added that the kingdom needed $88.60/b Brent to balance its fiscal budget, which is expected to be unsustainable and would, therefore, require the diversification of the Saudi economy.
In other news, S&P Dow Jones told their clients that Aramco could fast-track Saudi Aramco’s inclusion into their indices after it lists in December.
Aramco pumps 10 percent of the world’s oil and has been the backbone of Saudi’s economic stability since it was nationalized in the 1970s. The sale share is part of the prince’s vision 2030 to halt the country’s dependence on oil industry and diversify the economy.