Saudi Aramco confirmed that it plans to place its shares on the stock exchange in Riyadh that it will be the world's largest initial public offer (IPO). Saudi management on the capital market (CMA) agreed to approve the request of the state oil company to the partial placement of its shares on the market, said in a Saturday message control.
the State oil giant will determine the starting price of its shares for IPO after studying the demand from investors.
According to preliminary data, the number of shares to Saudi Aramco in the free float does not exceed 2%. The company intends to allocate 1% of its shares before the end of this year, another 1% will be offered for an IPO in 2020. Only on the stock exchange expected to bring 5% of the shares of the company. It is believed that Saudi Aramco worth today about $ 1.2 trillion.
Saudi Aramco said that it had no current plans for listing of foreign shares, adding that long discussed plans for a two-stage IPO, including a proposal for foreign currency, has been postponed.
Analysts say serious risks for investors and not only related to the volatility of oil prices.
"the Political and strategic risks are high for any company operating in the region, not least one that is a subsidiary of the Saudi state. Aramco also has limited control over policy production, a key part of the control of OPEC in Saudi Arabia," said Chris Beauchamp, chief market analyst traders derivatives IG Group.
Transfer into private hands even such a small part of the state company will be a fundamental change in the oil industry of Saudi Arabia since the 1970s years.
for the First time about a possible IPO Saudi Aramco announced in January 2016. After two years of preparation, the process was frozen in August 2018. The initial placement of shares was resumed in the summer of 2019, but a few months was again suspended.
