Post Attempts to Gain Foothold in India, Saudi Aramco Announces IPO
Saudi Aramco, a state owned oil company has announced its initial public offering (IPO) on November 3. Deeply affected by the oil attacks in September, the oil giant attempting to make a comeback in the market, has announced its intention to float on the domestic exchange.
Seeking to diversify its economy apart from oil, the proposed IPO of Saudi Aramco will be the world’s biggest listing.
Despite making an announcement about the IPO, the firm maintained silence with respect to other details like the launch date, number of shares sold and pricing of shares.
The value of the firm has dropped after the attacks as bankers claim that investors will probably value Saudi Aramco at nearly US$1.5 trillion. This is US$0.5 trillion less than what was the main idea of IPO of Crown Prince Mohammed bin Salman four years ago.
Post the oil attacks, investors have raised direct questions about the security of the company, but Aramco refuses to speak about the measures taken after the unprecedented attacks.
As per Reuters, being the most profitable firm of the world, Saudi Aramco would be offering one to two percent of its shares on the local bourse, raising nearly US$20 billion to US$40 billion.
Commenting on the benefits the firm will reap for investors in near future, Chairman Yasir-al-Rumayyan at a news conference at Dhahran said, “Today is the right opportunity for new investors to reap the benefits of Aramco’s ability to achieve value, and boost it on the long-term.”
Rumayyan highlighted that Saudi Aramco will focus on knowing about the interests of its investors and the price range will be decided after that.
At the news conference held at Aramco headquarters, Dhahran saw Chief Executive Amin Nasser revealing that the firm plans to release prospectus on November 9.
Even after the IPO, Aramco would continue to be worth more than the world’s most valuable listed companies, namely Microsoft Corp and Apple Inc.
Meanwhile, Saudi Aramco will gain strong foothold in India as the country plans to lease one-quarter of its strategic petroleum reserves in Padur to Saudi Aramco. The oil company would be given space having storage capacity of about 4.6 million barrels of oil.
As the economy of India is growing at a speedy rate, oil producers all over the world are curious to enter the Asian country.
In 2018, Abu Dhabi National Oil Co signed a preliminary agreement to use half of the Padur reserve. As of now, it is the only foreign company that has stored oil in the strategic reserves of India.
The IPO announced would be declaring aggregate ordinary cash dividends of at least US$75 billion in 2020. Currently, the dividend offered by Royal Dutch Shell is more than that being offered by Saudi Aramco, luring more investors to the former’s side.
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