Yesterday Saudi Aramco set a price range for its IPO that implies the company could be worth between USD1.6tn and USD1.7tn, well below the USD2tn that the Saudi government was hoping for, but more than the USD1.5tn that was the market whisper. Even at the lower valuation, it’s still the world's biggest IPO. The book-building process ends for retail subscription on the 28th November and the 5th December for institutions.
In the press statement, Aramco stated it's hoping to sell approximately a 1.5% stake in the company, still a massive 3bn shares at an indicated range of 30 to 32 Saudi riyals (at the time of writing the USDSAR is trading at 3.75), valuing the IPO at just over USD25.50bn. This would beat Alibaba’s IPO. The Chinese e-commerce giant floated in New York in 2014 for USD25bn.
Aramco is the world’s most profitable company, making over USD110bn in net income in 2018 alone, and, if all goes to plan, will start publicly trading next month on Saudi's stock exchange, the Tadawul. Of interest is the fact that due to lacklustre response from investors outside of Saudi Arabia, the company has decided shares won’t be marketed in the U.S., UK and Canada (as well as Japan) as originally planned. However, the lead managers that are underwriting the deal are confident that there was more than enough local demand to ensure the deal’s success at the proposed valuation.