World's largest oil firm Saudi Aramco has set a price range for its much awaited listing which indicates that the oil giant is worth between $1.6 trillion to $1.7 trillion, making it potentially the world's biggest IPO. The world's most profitable company's shares are expected to begin trading in December (2019).
Crown Prince Mohammed bin Salman first announced plans for a partial IPO in 2016. The world's most profitable company plans to list in Saudi Arabia and on an international exchange. Salman in 2016 insisted that the world's largest oil producer was worth $2 trillion but at a meeting to clear way for the IPO, bankers made it clear that international investors had little appetite to buy at $2 trillion valuation.
Today Armaco said it plans to sell 1.5% or about 3 billion shares, at an indicative price range of 30 riyals ($8.00) to 32 riyals, valuing the initial public offer (IPO), at 96 billion riyals ($25.60 billion) at the top end of the range.
If Aramco manages to raise funds at top end of the range, it could just beat the record-breaking $25 billion raised by Chinese e-commerce giant Alibaba when it listed in New York in 2014. Earlier this year, Aramco raised $12 billion in its first international bond, gaining more than $100 billion in demand, in a deal that many saw as a pre-IPO relationship-building exercise with international investors.
Aramco, which pumps about 10% of the world's crude oil emerged as the world's most profitable company in 2018. Saudi Aramco beat American behemoths including Apple Inc. and Exxon Mobil Corp in terms of earnings.
The Saudi oil giant's financial books revealed that it earned a net income of $111.1 billion last year, confirming that it is the world's most profitable company by far, as per extracts from Aramco's accounts published by Fitch Ratings.
The company generated earnings before interest, tax and depreciation of $224 billion last year, Fitch said, which is remarkably above the $82 billion of Apple or the $40 billion of Exxon Mobil. The credit rating agency awarded Aramco A plus ratings ahead of its debut in the international bond market.
By Aseem Thapliyal