Historical moment for Saudis: Aramco IPO to start taking bids today

RIYADH — Saudi Aramco will start taking bids from local and foreign investors Sunday (Nov. 17) in a highly anticipated stock offering that may raise between $20 billion and $40 billion, following the release of its prospectus last Sunday.

Saudi Aramco’s listing on the local stock market (Tadawul) could help strengthen the government’s net asset position, with the proceeds potentially raising the Kingdom’s longer-term economic growth, Standard & Poor’s (S&P’s) Global Ratings said.

“The bulk of the funds raised will go to the government or the Public Investment Fund (PIF), potentially adding to the sovereign’s already strong fiscal net asset position of 72.7 percent of GDP,” S&P said in a note published by Reuters.

“Productively deployed, we believe the assets could also help maintain growth potential through our three-year ratings horizon.”

Separately, some Saudi banks have announced that they will be extending the working hours in all branches participating in the IPO.

Some banks in the eastern regions of the country announced the extension of work for three hours to give opportunity for those coming from abroad to contribute to the IPO.

The prospectus, a 658-page document, said the final share price would be determined on Dec. 5, a day after subscriptions close, in what is expected to be the world's biggest initial public offering.

Aramco said it would sell a part of its shares to institutional investors, including foreign companies, as well as to individual Saudis and other Gulf nationals.

The company said it has decided to sell up to 0.5 percent of its shares to individual investors while it will decide on the percentage for larger investors later.

"The targeted percentage of Offer Shares allocable to individual investors will be up to 0.5 percent of the shares," the prospectus said.

The company said it would determine the percentage to be sold to institutional investors after consultations with its financial advisors and global coordinators consisting of major international banks.

Even though the size of the IPO has not yet been disclosed, it is expected to be the biggest ever, raising over $30 billion.

The prospectus said the offering period will start on Sunday, Nov.17, ending on Nov. 28 for individual investors and on Dec.4 for institutional investors.

The company will set a price range for the shares on Nov. 17 but the final price will only be determined on Dec. 5, the day after all subscriptions close.

"Trading of the shares is expected to commence after all relevant legal requirements and procedures have been completed," the company said without setting a specific date.

Aramco officials last week announced a share sale on the Riyadh stock market for the world's most profitable company, which pumps 10 percent of global oil supply.

Saudi investors appear keen on the prospect of owning a piece of the company, seen as the Kingdom's economic crown jewel.

The company said it had hired a host of international banking giants including Citibank, Credit Suisse and HSBC as financial advisors and book-runners.

Aramco, a company that catapulted the Kingdom to become the Arab world's biggest economy, does appear to hold enormous appeal for local retail investors.

Many Saudis appear to be tapping lenders and selling personal assets to raise money to invest in the share sale. Aramco last year posted $111.1 billion in net profit. In the first nine months of this year. — SG