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When is the Saudi Aramco IPO?
Saudi Aramco could go public in 2020, but there is no confirmed date for the IPO. Saudi energy ex-minister Khalid Al-Falih hinted that the IPO may be pushed to 2021.
Plans for the IPO were announced in 2016 but Saudi Aramco, the world’s most profitable company, pushed back the date several times due to bookkeeping and corporate structure issues. Saudi Aramco’s senior VP of finance, Khalid Al-Dabbagh, confirmed that the company is ready for the IPO, but the timing will depend on shareholders’ perception of the market. The company is likely to list on the London Stock Exchange (LSE), where its bonds are listed, or the New York Stock Exchange (NYSE).
How to trade the Saudi Aramco IPO
You can trade the Saudi Aramco IPO before and after the listing, giving you more opportunities to gain exposure to the oil and gas giant.
Before the listing
If IG offers a ‘grey market’ ahead of the Saudi Aramco IPO, you could speculate on the company’s share price before it lists on an exchange. We base the price of a grey market on our prediction of a company’s market capitalisation by the end of its first trading day. This enables you to ‘buy’ or ‘sell’ depending on the direction you think the market cap will take.
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What will the Saudi Aramco IPO value be?
There is no confirmed Saudi Aramco IPO value yet. It has been reported that Saudi Crown Prince Mohammed bin Salman is after a $2 trillion valuation, but the final figure will depend on the outlook for oil prices, as well as Saudi oil production and exports. Ultimately, one of the world’s investment banks will set the Saudi Aramco IPO value.
What could the Saudi Aramco share price be when it floats?
The Saudi Aramco share price will depend on the final valuation and the amount of shares the business will release to the public. The Saudi kingdom plans to sell a mere 5% of the company’s shares, with the majority remaining the property of the sovereign government. After the listing, the share price will fluctuate as supply and demand changes.
Why is Saudi Aramco going public?
Saudi Aramco was originally planning on going public to raise capital for the kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), which it was expected to join. At the time, it was anticipated that the listing would push the fund’s value up to $3 trillion. However, the PIF no longer needs the cash injection so Saudi Aramco is now focusing on raising money for its own diversification and is no longer expected to be brought under the PIF’s umbrella.
What is the outlook for Saudi Aramco?
The outlook for Saudi Aramco is mixed, as a few factors should be taken into consideration when forecasting the future of the company. The short-term outlook is based mainly on its exposure to oil – therefore, the oil price. If there is an uptrend, Saudi Aramco should be pleased with the investment bank’s decision at the time of the IPO. However, fears of a recession in the US might have a negative impact on petroleum demand.
The long-term outlook will depend on the outcome of the IPO. The point of the listing is to diversify and move away from industry trends surrounding fossil fuels. If it can execute its plan, the outlook could be positive. It has already started its expansion by way of the recent acquisition of a 70% stake in Saudi petrochemicals giant SABIC.
How has Saudi Aramco been performing?
Saudi Aramco has been growing its revenue every year, while cutting production costs and reducing its carbon footprint. In 2017, net income was $75.9 billion, increasing to $110.1 billion in 2018. The half-year report for 2019 revealed net income of $46.9 billion. The company has managed to cut extraction costs of crude oil to just $7.50 a barrel and overheads are only $1.50 per barrel. Oil production in 2019 is expected to reach 12.5 million barrels a day.
Who are Saudi Aramco’s competitors?
Saudi Aramco’s competitors include Shell (£223 billion), BP (£102 billion), Chevron (£224 billion) and Exxon Mobil (£295 billion), but it trumps all these companies in terms of market cap and revenue. Surprisingly, Saudi Aramco was formed much later than its competitors, it has the least number of employees and it is the only conglomerate between the five that hasn’t listed.
Saudi Aramco management team
There are seven key executives on Saudi Aramco’s corporate management team
|Amin H. Nasser||President and chief executive officer|
|Nabeel A. Al Mansour||Senior VP general counsel and corporate secretary|
|Mohammed Y. Al Qahtani||Senior VP upstream|
|Abdulaziz M. Al-Judaimi||Senior VP downstream|
|Ahmad A. Al-Sa’adi||Senior VP technical services|
|Muhammad M. Al-Saggaf||Senior VP operations and business services|
|Khalid H. Al-Dabbagh||Senior VP Culture|
Who are the Saudi Aramco IPO advisors?
Saudi Aramco has three independent IPO advisors and three global coordinators (underwriters). However, recent reports have stated that the structure might change before the IPO.
Register your interest for IPO news
How do IPOs work?
IPOs – short for ‘initial public offerings’ – happen when a company decides to list its shares on an exchange. This means the public can then buy or trade the shares. IPOs can create a lot of public interest, especially if the company is doing well. To learn more about IPOs and how they work, watch this short video.
1Based on revenue excluding FX (published half-yearly financial statements, June 2019).