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Saudi Aramco IPO an offer that is too good to refuse



Saudi Aramco is preparing to make the public debut of the Saudi Arabia stock exchange, and many participants are in it since Crown Prince Mohammad bin Salman made them an offer they could not refuse.

You see, in the interest of the Saudi government, the Aramco IPO, which is getting its first launch. in Saudi Arabia, it has to be successful. That's because when they go to exchange outside Saudi Arabia, the oil company will look more attractive. little, shall we say, invitation to invest a boat of money from some of the princes' personal coffins. I'm not going to say that the Saudi government has exactly used what you might call high-pressure selling tactics, but let's just say they made some princes as an offer they couldn't refuse. OF THE ARAMCO IPO

What makes it a little disturbing is that the initial launch of the historic IPO should be a measure of genuine investor interest and a measure of genuine appreciation. It will eventually become the world's largest offering and will therefore need to allow the market to value it fairly. Prince Mohammed estimates that a fair valuation will exceed $ 2 trillion.

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However the $ 2 trillion valuation Prince Mohammed hopes to achieve for Saudi Aramco probably won't happen. That was despite the crown prince's goal of boosting oil prices by cutting production and his campaign to win friends and influence people in his attractive and effective way. , or even less. Probably way less, even less than $ 1

trillion.

That would be a major blow to the ego of Prince Mohammed, not to mention some early investors. In fact, the banks involved in the initial public offering of the company offer a broad range of the company's true value, and according to one bank, can cost only $ 1.5 trillion, give or take a trillion.

Other banks, according to reports, suggested wide swings in appreciation. And it's not just size that matters. At some point, investors want to see profits.

While Saudi Aramco is said to be the most profitable company in the world, there are still challenges.

JP Morgan Chase has reportedly said that for Saudi Aramco to pay for all the goodies ad sweeteners, they will need an oil price of $ 64.2 a barrel to break even. As time goes by, after all the incentives have been paid, that break is less. That is to say that the company can compensate for losses at any time as the oil dips below that amount. If the oil does not reach that level, will the stock's attractiveness continue? Currently it costs $ 57.44 per barrel.

If oil does not hit $ 64.2, it will come as a disappointment to some princes who, according to, we should say, have been encouraged, to pump millions of dollars to acquire some shares.

This is not to say that Saudi Aramco's stock may be good at some point, but the best way to find its way is to allow the market to dictate its value. It should not have pumped up millions of dollars of money that would not have been there had it not been for a small crown prince of muscle.

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