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article imageSaudi Aramco to confine marketing of shares to kingdom and region

By Karen Graham     Nov 18, 2019 in Business
Saudi Arabia has abandoned plans to formally market shares in its state-owned oil company outside the kingdom and its Gulf neighbors, in the latest sign of the initial public offering’s shrunken ambitions.
On Sunday, according to the Aramco prospectus on the company’s website, the valuation of the company was listed at up to $1.71 trillion, making the initial public offering (IPO) the world's biggest.
All the hoopla over the international roadshow has been called off, it was learned today. The U.S. and Asia shows were called off on Sunday and the European investors meeting scheduled for Monday is now canceled, according to people familiar with the matter, reports the Financial Times.
Aramco plans to rely heavily on ultra-wealthy Saudis, many of whom have been pressed to invest, to get the deal done. And Saudi banks have been pressured to loosen lending restrictions to help locals to buy more shares.
It amounts to the IPO going from a strong sign of economic change in the country that was expected to garner millions in investments for the kingdom to a slimmed-down share sale.
According to BNN Bloomberg, It is starting to look more like a tax on the country’s economy. Maybe the internal IPO will raise the $25 billion - valuing the company at US$1.6 trillion to US$1.7 trillion, but it will be well short of the $100 billion that Saudi Crown Prince Mohammed bin Salman said he was expecting to raise.
“The valuation range is higher than most institutional investors would consider attractive,” said Neil Beveridge, an analyst at Sanford C. Bernstein & Co. “Aramco’s price range would imply a premium valuation to western oil majors on almost every valuation metric.”
Regardless of the number of shares that get sold, the process will continue until December 4, 2019. The stock is expected to price the following day and then begin trading on Riyadh’s Tadawul exchange a week later.
Saudi Aramco, the world’s most profitable company with an annual net income of $111 billion, is hoping to exceed the $25 billion raised by Chinese e-commerce group Alibaba in 2014.
More about saudi aramco, $171 trillion valuation, local investors, initial public offering, Business
 
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