Saudi Arabia’s state oil company, Saudi Aramco kick-started its initial public offering (IPO) on Sunday, announcing its intention to list on the domestic bourse as the kingdom seeks to diversify and create the world’s most valuable listed company.
Aramco did not give a time frame or say how much of the company it would sell, but sources have told Reuters the oil company could offer 1%-2% of its shares on the local bourse, raising as much as $20 billion-$40 billion.
Aramco said the IPO would be split into two tranches: one each for institutional and individual investors. The percentage of shares to be sold and the purchase price would be determined after the book-building period, it added in a statement.
Confirmation of the share sale in Saudi Arabian Oil Co, or Aramco, as the oil giant is usually known, comes about seven weeks after crippling attacks on its oil facilities, underlining Saudi Arabia’s determination to push on with the listing regardless.
Aramco said it does not expect the Sept. 14 attack on its oil plants will have a material impact on its business, operations and financial condition.
The attacks targeted the Abqaiq and Khurais plants at the heart of Saudi Arabia’s oil industry, causing fires and damage and temporarily shutting down 5.7 million barrels per day (bpd) of production – more than 5% of global oil supply.
The company did not specify any additional security measures.
The IPO of the world’s most profitable company is designed to turbocharge Crown Prince Mohammed bin Salman’s economic reform agenda by raising billions to diversify the kingdom, whose dependency on oil was highlighted by the production impact of the September attacks.
“It is a colossal public offering that could potentially generate more than 10 years’ worth of proceeds raised through IPOs in the country,” said Salah Shamma, head of investment, MENA, Franklin Templeton Emerging Markets Equity.
He said some local investors could be selling other shares in order to shift their investments to Aramco, but this could well be a case of “short-term pain for long-term gain.”