Saudi Aramco Floated at $1.7 trillion Valuation
Following the recent announcement that the world’s most profitable company, state-owned Saudi Aramco will soon be launching an IPO, a flotation plan has revealed the estimated valuation at $1.7 trillion.
This valuation should easily create the world’s most valuable listed company, and reports indicate it will achieve this through the sale of a 1.5% stake in three billion shares. This is just short of market analyst predictions for 2% of the company to be sold off to the public.
The IPO’s targets specify between $24bn and $25.6bn is to be raised for the Saudi government to diversify into other revenue channels beside oil, specifically growth in tourism.
The valuation could have bene higher, but the official investment prospectus detailed some risks ahead, causing concern among investors.
According to Sky News, Jasper Lawler, head of research at London Capital Group, said of the flotation: "The valuation is short of the $2trn value sought by [the] Saudi Crown Prince.
"Foreign investors just weren't willing to pay up to give MbS (Mohammed bin Salman) his blockbuster.
"A valuation above $1.5trn seems to be where foreign demand dried up so under current plans, shares will be taken up by mostly domestic investors.
"Assuming the IPO moves ahead at this price range, it will succeed at the goal of raising funds for Saudi Arabia to diversify away from oil.
"It won't be the big draw of outside money into Saudi Arabia that it could have been."