Saudi Crown Prince Mohammed bin Salman is expected to announce on Sunday its green light for an IPO of the public oil giant Aramco, which will make it the most expensive company in the world.
The strong man of Saudi Arabia will put an end to suspense and uncertainty about the stock market baptism of Aramco, postponed twice already since 2018, told AFP on Friday a source close to the case on condition of anonymity.
Unless last-minute surprise, he should give his blessing, it was said the same source. The timetable for this operation and the terms should be disclosed on this occasion.
The transaction, which is the cornerstone of a reform program of the Crown Prince nicknamed “MBS”, should value the company to between $ 1,500 and 1,700 billion, the largest capitalization in the world, added the source.
If this figure is confirmed, it would mean that MBS has finally released the ballast after claiming since 2016 a capitalization of 2,000 billion.
In 2018, the strong man of the Kingdom had decided to postpone the IPO because the capitalization calculated by the bankers, after meetings with potential investors, was below this threshold.
This was also the case recently when Aramco, which was to launch in October the first part of its introduction, decided to postpone the date to December or January.
Saudi Arabia has always hoped that Aramco will be valued at $ 2 trillion, in order to recover $ 100 billion during the IPO.
– Transparency –
The schedule provides for a two-step entry: first on the Saudi local stock exchange, the Tadawul, in December, and in 2020 on an international financial center still unknown, according to banking sources.
Aramco is expected to sell a total of 5% of its capital, including 2% during its stock market baptism on Tadawul, said earlier this month sources close to the case at AFP.
Aramco executives met with investors in London and New York last week, the source said, adding that there is a reluctance on the part of foreign investors to question transparency, governance and transparency. group valuation.
“Lack of transparency” can be a problem, says Andrew Lebow, oil market specialist at Commodity Research Group. “It's hard to say if we'll have access to all the information about the business and finances of the company.”
There is also an important point that discourages more than one foreign investor, says Lebow: Aramco is not a business like any other.
By investing in it, an investor runs the risk of taking a stake in a company that is indirectly a member of OPEC through its main shareholder, Ryad.
“Therefore, we must be aware that Aramco will not always produce the maximum of its capabilities” since OPEC regularly checks the level of its supply of black gold.
Other unknowns: how will the company, accustomed to a single shareholder until then – the Kingdom – manage several with different objectives? Can it prevent further attacks on its oil facilities after those against two sites in mid-September?
Large Western funds are also reluctant because of commitments to fight global warming, according to banking sources.
They are wealthy Saudi families, under pressure, who will bring the funds during the operation on the local market, reports the agency Bloomberg News, citing unnamed sources.
Local banks would also have been encouraged to lend money to small investors, who would lose their savings if Aramco knew of a chaotic stock market baptism.
The operation is driven by major US banks, such as JPMorgan Chase, Morgan Stanley, Goldman Sachs and Bank of America Merrill Lynch.
The IPO of Aramco, founded in 1933, is at the heart of the reform plan named “Vision 2030” initiated by the Crown Prince Mohammed bin Salman to diversify the economy of a country ultra-dependent on oil.
Aramco recently reported net income of $ 46.9 billion in the first half, down 12% due to lower crude prices.
It was the first time the company had published half-yearly financial results, making it the largest money-earning group in the world.