Saudi Arabia has moved one step closer to listing Aramco's national oil giant in its exchange, releasing its initial prospectus late Saturday for what has been identified as the world's largest initial public offering.
However, the energy giant has indicated that it will not disclose how much it plans to sell the company or raise it from the offering until early December, depending on the investor's final demand.
After months of uncertainty over how much Aramco plans to list, the more than 600-page prospectus provides more information about the company's operations. The Saudi government aims to show investors why it believes the Saudi Arabian Oil Co, known as Aramco, should be valued more than oil and gas peers.
The key details of investors are focused on the missing. The company is repeating plans to pay an annual dividend of at least $ 75 billion by 2020 and has signed increases as well as special dividends may follow over time. investment premium that generates stable income. However, without knowing the valuation Aramco is targeting from the IPO, it is difficult for investors to accurately compare the state-owned energy company's dividend yield with publicly traded rivals such as Exxon Mobil Corp. among others.
It is not uncommon for companies to hold the target amount of shares to sell and the scope of appreciation for an IPO in an initial prospectus if demand for the offering is unclear. The Aramco IPO has been among the most watched offerings in recent years due to its size and its role in raising funds to help the country diversify its economy.
In the prospectus, Aramco indicated that it would determine the IPO pricing and the percentage of the company to be offered at the end of the book development period. Running from November 17 through December 4, at which time institutional investors are expected to submit orders. Individual investors have until November 28 to submit a request for shares, according to the prospectus. Aramco and its advisors will use this shopping season to determine the size and issue-based pricing required on the company's previous listing of local Tadawul stock exchanges.
Crown Prince Mohammed bin Salman, the daily ruler of the kingdom. , putting the company's value at $ 2 trillion. But bankers working on the deal say Aramco's valuation is between $ 1.3 trillion and $ 1.7 trillion. In an online roadshow presentation last week, Aramco said the oil giant would cost $ 1.5 trillion at an oil price of $ 45 a barrel; $ 1.76 trillion to $ 65; and $ 2.1 trillion to $ 75.
Brent crude, the global benchmark, closed at just under $ 62.61 a barrel on Friday.
Aramco says it can generate a return on capital, a key measure of investors, which is 30% -35% per annum compared to 5% -10% achieved by peers such as BP PLC, achieved by Royal Dutch Shell PLC and Exxon in recent years, according to an investor presentation.
To advance the sale, Aramco has negotiated sovereign-wealth funds in Abu Dhabi, Singapore and Malaysia and organized meetings with the Chinese government, but none of the funds are currently committed to buy at the IPO, the report said. The Wall Street Journal. Aramco is also expected to rely on the Saudi pension fund, which is largely run by the government, to buy the offer.
The prospectus issued on Saturday underscores Aramco's investment risks. Most for investors is probably the relationship between Aramco and the government, led by Prince Mohammed. The economy is fueled by the oil sold by Aramco, and although the Saudi leader wants to use the proceeds of the list to invest in new non-oil industries, he may still have to tap the firm for dividends.
Other dangers listed range from falling from climate change to demand and oil prices to potential disruption of oil production from terrorist attacks and other forms of armed conflict. Investors have raised concerns about the security of Aramco's assets following attacks on oil facilities in September that knocked down half the company's production.
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