Saudi Arabia’s market regulator approved on Sunday Saudi Aramco’s application to list on the domestic stock market as the kingdom seeks to diversify and create the world’s most valuable listed company.
The statement did not give a time frame or say how much Aramco would sell, but sources have told Reuters the oil company could sell 1%-2% of its shares on the local bourse, raising as much $20 billion-$40 billion.
Confirmation of the share sale in Saudi Arabian Oil Co, or Aramco, as the oil giant is usually known, comes about seven weeks after crippling attacks on its oil facilities, underlining Saudi Arabia’s determination to push on with the listing regardless.
The IPO of the world’s most profitable company is designed to turbo charge Crown Prince Mohammed bin Salman’s economic reform agenda by raising billions to diversify the kingdom, whose dependency on oil was highlighted by the production impact of the Sept. 14 attacks.
The Capital Market Authority said its board “has issued its resolution approving the Saudi Arabian Oil Company (Saudi Aramco) ... application for the registration and offering of part of its shares.”
CMA said the approval would remain valid for six months.
The listing announcement had been expected on Oct. 20 but was delayed after advisers said they needed more time to lock in cornerstone investors, three sources told Reuters.
To help get the deal done, Saudi Arabia is relying on easy credit for retail investors and hefty contributions from rich locals.
Prince Mohammed gave the green light on Friday for the IPO to go ahead, Reuters reported, citing sources.
Although Crown Prince Mohammed put a $2 trillion valuation on the company in early 2016, bankers and company insiders say Aramco’s value is closer to $1.5 trillion.
A growing movement to fight climate change and embrace new “green” technologies have put some fund managers, particularly in Europe and the United States, off the oil and gas sector.
At a valuation of $1.5 trillion, Aramco would still be worth at least 50% more than the world’s most valuable companies, Microsoft and Apple, which each have a market capitalisation of about $1 trillion.
But a 1% sale would ‘only’ raise around $15 billion for Saudi coffers, less than the $25 billion generated by Chinese e-commerce giant Alibaba in its record-breaking IPO in 2014.
A sale of 2% of Aramco shares at a $1.5 trillion valuation would make it the biggest IPO of all time, beating Alibaba’s.
The prospect of the world’s largest oil company selling a piece of itself has had Wall Street on tenterhooks since Crown Prince Mohammed flagged it three years ago.