A billboard advertisement in Jiddah, Saudi Arabia, reads 'Saudi Aramco, soon on the stock exchange' © APSaudi Arabia revealed on Sunday that it will seek to raise between $24-$25.6bn from the listing of Saudi Aramco, a fraction of the $100bn it had once hoped for.
Aramco will float just 1.5 per cent of its total shares to investors at price that will value the company at between $1.6tn-$1.7tn. This would still make it the largest listed company in the world — overtaking Apple — but it falls far short of the $2tn valuation sought by Crown Prince Mohammed bin Salman, the kingdom's heir apparent.
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While Aramco will still court investment from top foreign institutions, it is now paring back its international roadshow, which will no longer include trips to the US or Japan.
The IPO will instead rely heavily on demand from domestic retail investors, as well as Saudi funds, regional investors and other sovereign funds. Saudi officials have visited China and Russia in recent weeks in a bid to underpin demand from countries that have been keen to deepen ties with the oil-rich kingdom.
One banker on the deal said the listing was effectively an IPO in name only after efforts to recruit foreign investors were curtailed.
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Foreign institutional interest will be limited to the roughly 1,500 qualified foreign investors already able to trade on the Saudi stock exchange or those nominated by Saudi Aramco or its advisers and approved by the market regulator.
Saudi bankers report plentiful domestic demand for the issuance, with pressure on wealthy families and institutions to apply for allocations of shares at the higher end of the valuation.
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The bookbuilding process began on Sunday. It ends for retail subscriptions on November 28 and for institutions on December 4. The final price for the shares will be announced on December 5, just as oil ministers from Opec countries meet to decide oil supply policy for the next year.
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Saudi Aramco pares back IPO on weak foreign demand https://www.ft.com/content/6a84cf06-090a-11ea-b2d6-9bf4d1957a67
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