What’s been a lengthy process continues to unwind for Saudi Aramco, which is still seeking to offer an IPO in 2018 for just five percent of the massive oil company. That means when the expected share sale begins, the Kingdom will be able to garner $100 billion from its state-run company.
The investment is ironically meant to help fund a greater diversification of the Saudi economy, which for decades has obviously been oil-based. That plan, known as Vision 2030, has been in the works since oil prices began dropping in mid-2014., with other energy sources also expected to be part of the big picture.
History will be made when this IPO takes place, considering the amount that Saudi Aramco brings in will be larger than Chinese company Alibaba’s record of just a few years ago. Given the size of the IPO, other exchanges than simply Saudi Arabia’s Tadawul will need to be a part of the picture.
Due to security rules for the New York Stock Exchange, the company may not list there. One of the chief drawbacks is that the company would have to disclose what it considers to be proprietary information related to its available reserves.
Some controversy exists as to whether the price being offered is a legitimate representation of the value of Saudi Aramco. Based on the $100 billion for five percent offering, that would make it a $2 trillion company. Since the Kingdom is reluctant to share information, there’s been a level of doubt about whether or not investors would be getting true value.
The current trip around Asia by King Salman is meant to build interest in such investments over the next year. Regardless of doubts, there appears to every expectation that investors will be able to make a profit.