Saudi Aramco value in bank research varies by more than $1 trillion

Saudi Aramco’s Nine-Month Profit Falls 18% as IPO Starts

The IPO is a part of the plan created by Saudi Crown Prince, Mohammed bin Salman to wean Saudi Arabia off oil and further develop other sectors of the economy.

Saudi Aramco's blockbuster listing remained shrouded in mystery on Monday, a day after the company finally announced its plans, with scant details disclosed and expert valuations varying wildly from around $1.2 to $2.3 trillion. 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. A disappointment - if, say, Aramco fails to attract investor interest and the share price sinks when trading starts - could backfire on the 34-year-old prince, who wants to use proceeds from the Aramco sale to fuel his high-stakes effort to wean the Saudi economy off its dependence on oil and government spending.

Analysts from banks working on the deal have met with Aramco's management in Dhahran over the past month to get more information on the company, but their valuations of Aramco still vary by around $1 trillion.

That much we know about Saudi Aramco's planned share listing.

The Saudi government has already conceded the company probably is not worth the $2trn valuation crown prince Mohammed Bin Salman has long advocated. Many fund managers are concerned that the shift away from the internal combustion engine - a technology that drove a century of steadily rising demand - means consumption of oil will peak in the next two decades. It is due, however, to release a detailed prospectus on November 9, according to Bloomberg.

The deal revolved around drilling for oil, and a new company - Saudi Aramco - was created for this very goal.

Saudi investors would be eligible to receive bonus shares - a maximum of 100 bonus shares for every 10 allotted shares.

On top of it all, Saudi Aramco's new chairman, Yasir al-Rumayyan, is also in charge of the country's sovereign wealth fund - a dual role that has some prospective stock buyers concerned about company governance, as the wealth fund is the ultimate destination for the IPO sales.

The full US$1.4-trillion range is more than the combined market capitalization of the world's six most valuable publicly traded oil and gas producers: Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp, PetroChina, Total SA and BP Plc.

Aramco stated that the IPO would be divided into two tranches, for individual and institutional investors respectively.

On Sunday, the long-awaited IPO announcement failed to spur the Riyadh market, which closed nearly 2.0 percent lower.

However, becoming more like an International Olympic Committee has its downsides: the company will inevitably be more focused on quarterly returns and short-term profits and have less ability to do the big, long-term, countercyclical strategic planning that it can do now.

Aramco gave no explanation for the decline in its results, although its nine-month income alone exceeded the net posted previous year by Apple Inc, the most profitable publicly traded company.

Add it all up, and no one's yet sure where Saudi Aramco's IPO will land.



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