Dec 6, 2019

Saudi Aramco's IPO is huge and limited at the same time

Illustration: Eniola Odetunde/Axios

There's a split-screen effect with the Saudi Aramco IPO: it's simultaneously the largest ever and an event that's less consequential than initially envisioned.

Driving the news: The company yesterday said shares would be priced at 32 riyals, or $8.53, per share on the country's domestic exchange, representing a $1.7 trillion valuation.

  • They're initially selling 3 billion shares, a 1.5% slice, which means a $25.6 billion offering that edges out the 2014 IPO of the Chinese conglomerate Alibaba for the record.

Why it matters: That's a lot of money that Crown Prince Mohammed bin Salman (MBS) hopes to steer toward the kingdom's efforts at economic diversification.

  • Trading begins this month, the culmination of the long-planned, often delayed effort.

But, but, but: It's all a far cry from MBS' earlier vision of a 5% float of the world's largest oil-producing company, with a higher $2 trillion valuation.

  • Plans for a listing on an international exchange seem to be on hold at best.

The big picture: Bloomberg notes that for MBS, getting the sale across the finish line "could help get his ambitious plan to overhaul the economy back on track."

  • "It’s been derailed by problems at home, including the backlash against his purge of the elite, and abroad by the outrage over the murder of Washington Post columnist Jamal Khashoggi and the war in Yemen," they report.

Go deeper:

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Oil giant Saudi Aramco sets initial IPO valuation at $1.7 trillion

The Saudi Aramco oil refinery in Saudi Arabia. Photo: Tom Stoddart/Hulton Archive/Getty Images

Saudi Arabian state-owned oil giant Saudi Aramco said in an updated prospectus Sunday that it has set an initial valuation of $1.6 trillion to $1.71 trillion.

Why it matters: The IPO could potentially be the world’s biggest, though it does fall short of Saudi Crown Prince Mohammed bin Salman's hopes of a $2 trillion valuation.

Go deeperArrowNov 17, 2019

Saudi Aramco's shrinking IPO

President and CEO of Saudi Aramco Amin Nasser (left), and Aramco's chairman Yasir al-Rumayyan (right).

Saudi Arabia's decision to abandon a $2 trillion valuation for the Aramco IPO underscores hurdles facing Crown Prince Mohammed bin Salman's plans to use the company as a tool for diversifying the kingdom’s crude-reliant economy.

Driving the news: ICYMI, over the weekend Aramco announced preliminary pricing on the offering that signals an estimated valuation of the world's largest oil-producing company in the $1.6–$1.7 trillion range.

Go deeperArrowNov 18, 2019

Podcast: When the biggest IPO isn't big enough

Saudi Aramco is taking the world's largest oil producer public in what is expected to be the largest IPO of all-time — but it will be smaller than expected. Dan digs in with Axios' Ben Geman on what this means for global financial and energy markets, plus the future of Saudi Arabia.

Go deeper: Saudi Aramco's shrinking IPO

Keep ReadingArrowNov 18, 2019