Saudi Crown Prince approves announcement of Aramco IPO

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Saudi Arabia’s Crown Prince Mohammed bin Salman on Friday agreed that the initial public offering of state oil giant Aramco will be announced on Sunday, five sources familiar with the matter told Reuters.

The world’s top oil company will announce its intention to float (ITF) on November 3, the sources said.

Aramco could set a new record if the company’s ambitious valuation is achieved.

Saudi Aramco officials and advisers held last-minute meetings with investors over the past few days in an attempt to achieve as close to a $2 trillion valuation as possible.

A final meeting by the Saudi government on Friday evening centered on how to go ahead with the listing.

Although Crown Prince Mohammed Bin Salman put a $2 trillion valuation on the company in early 2016, bankers and company insiders say Aramco’s value is closer to $1.5 trillion.

At that price, Aramco would still be worth at least 50% more than the world’s most valuable companies, Microsoft and Apple, which each have a market capitalization of around $1 trillion.

Riyadh is looking to list a 1%-2% stake on the Saudi stock market to raise at least $20 billion-$40 billion.

If the deal exceeds $25 billion, Aramco will become the biggest IPO in the world, topping Alibaba’s $25 billion IPO in 2014.

The Aramco IPO has been promoted by Saudi government officials as one of the key cornerstones of Saudi Arabia’s Vision 2030 reform plan, which aims to wean the Kingdom off its reliance on oil and diversify the economy.

“I want to move on… we in the energy industry in Saudi Arabia, we have got a few challenges, we have got an IPO and we want to make sure it’s a successful IPO,” Saudi Arabia’s Energy Minister Prince Abdulaziz said at the Russia Energy week earlier this month.

The state-owned oil major has also approached governments in the Gulf and Asia, including China, to try to secure the bulk of the investment from countries on friendly terms with Saudi Arabia, as the reception elsewhere has been cooler, sources said.

Source: Reuters

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