Saudi Aramco, Saudi Arabia’s giant State Oil Company has kickstarted plans to issue its shares to the public. The move aims to diversify the country’s economy and move away from solely relying on oil revenue.
In a statement, the firm said it will split the IPO into two tranches. One for institutional investors and another for individual investors.
The firm did not reveal the percentage of shares to be sold on the Saudi Tadawul stock exchange where it intends to list.
According to chairman Yasir Al-Rumayyan, the company will determine the valuation during the investor roadshow and book-building for the IPO.
Bankers have told the government that investors will likely value the company at around $1.5 trillion. This is below the $2 trillion valuations floated by Crown Prince Mohammed bin Salman when he first announced the idea of an IPO nearly four years ago.
“Today is the right opportunity for new investors to reap the benefits of Aramco’s ability to achieve value, and boost it on the long-term,” Aramco Chairman Yasir al-Rumayyan told a news conference at the company’s headquarters in the eastern city of Dhahran.
He further added that the company will spend the next 10 days talking to investors.
The Capital Markets Authority has approved the company’s application for registration and offering part of its shares. The approval remains valid for six months.
The proceeds from the IPO will boost the firepower of Saudi Arabia’s sovereign wealth fund, which already has investments in funds managed by Blackstone Group and SoftBank Group.
It will also be used to fund mega-projects such as NEOM, a $500 billion futuristic mega-city planned on the northern Red Sea coast,
Aramco holds a monopoly in Saudi Arabia. It produces over 10 million barrels of crude oil a day and is the world’s largest exporter of crude oil.