What is an IPO?
An initial Public Offering (IPO) refers to the process of selling a portion of a Private Company to the Public (for the first time) through the issuance of new shares. An IPO is typically used by companies to raise capital for expansion and growth without the requirement to repay investors or creditors.
Who Is Saudi Aramco?
The Saudi Arabian Oil Company (Saudi Aramco) is a state-owned oil and gas producer based in Dhahran, Saudi Arabia. The company is the world’s largest single producer of Oil with a reported production rate of over 10 million barrels of oil per day. In 2018 Saudi Aramco made $111.1 billion in net income, easily outperforming US Oil giants such as Exxon Mobil and Shell by almost 5 times.
The Saudi Arabian Oil Company (Saudi Aramco), is set for a valuation between $1.6 and $1.7 trillion USD according to recent announcements from the Petrol and Natural Gas Titan. Saudi Aramco released a press statement on the 17th November 2019 explaining its plan to sell a 1.5% stake or approximately 3 billion shares in the company.
The price range of each share is being estimated between 30 – 32 SAR which is approximately $8 USD would value the Initial Public Offering (IPO) at $25.6 billion USD. The final price and ultimate valuation are set to be published by Saudi Aramco on December the 5th 2019. If the share valuation meets the higher value of the range, this will be the largest IPO ever, breaking the record held by the Alibaba Group which raised $25 billion USD in September 2014.
According to its 658-page prospectus, 0.5% of the IPO shares will be offered to retail investors whilst 1% will be remain for Institutional investors. The offering period for institutional and retail subscribers will begin on the 17th November 2019 lasting until the 28th November for retail and the 4th December for Institutions.
The shares will be listed on the local Saudi stock exchange, the Tadawul. Tadawul was launched in 2007 and is the sole entity authorized within the Kingdom of Saudi Arabia to act as the Securities Exchange (the Exchange). The Tadawul is the largest (by market capitalization) and most liquid stock exchange in the Middle East and North Africa.
In order to invest through Tadawul it is necessary to setup an investment portfolio with the exchange and meet the GCC/KSA national or KSA resident criteria. The following investors will be eligible for opening investment portfolios:
- Natural persons.
- Joint stock and limited liability companies.
- Authorized persons.
- Charitable and social institutions and associations.
- Licensed mutual funds.
- Public institutions.
- Government funds.
- Any other person authorized by the Capital Market Law and its implementing regulations to own and trade securities.
For more information in obtaining residency or setting up a company in KSA, please contact GCC Solutions at Dan.Crumplin@GCCSolutions.com