Corporate Financing Analysis - Mammoth Saudi Aramco Float Edging Closer - 09 OCT 2017


The world's most hotly anticipated IPO, which is set to be completed by the world's largest oil company in terms of crude oil reserves and production, has set its listing date for late 2018. Saudi Arabia's state-run oil company Saudi Aramco remains on track to record the largest float on record - which could see the oil behemoth tap equity capital market (ecm) investors for as much as USD100bn, according to some top end estimates - after Saudi Finance Minister Mohammed al-Jadaan quashed rumours that the company's public market listing would be postponed until 2019.

Aramco is estimated to be worth around USD2,000bn and, although it is only proposing to sell a 5% stake in the company to investors, that minority holding could be worth around USD100bn. If successful, such a deal would boost the company which has been struggling with low oil prices despite the cuts in production under the OPEC agreement. The IPO will require disclosure of Saudi Arabia's oil reserves, earnings and revenues to investors before any deal can proceed, however. In the meantime, a reduction in taxes on Aramco from 85% to 50% - which was announced in March 2017 - should help boost the company's valuation and dividends further in advance of the proposed listing.

NYSE vs LSE

Strong And Steady
Crude Oil Refining Capacity, 000b/d
Source: EIA, BMI, Saudi Aramco

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