Saudi Crown Prince approves announcement of Aramco IPO on November 3

Still, Saudi Arabia was abuzz, with the import of the moment and hope of getting rich. Stock will be listed on the Tadawul Exchange, but Aramco didn't say when trading begins. The firm claims it accounted for about one in every eight barrels of crude oil produced globally between 2016 and 2018.

Aramco became known as the world's most profitable company this year when for the first time it disclosed financial figures that showed it achieved $111 billion in net income for 2018.

Numerous high-revenue companies are increasingly looking towards launching their IPO lately, primarily owing to the benefits offered by the process, including raising equity capital, liquidity for employees and investors, branding and visibility, the currency for M&A.

Part of the Crown Prince's economic plans for the kingdom, the flotation aims to raise billions of dollars.

The Saudi stock market fell 2% on Sunday after the announcement. It costs just $2.80 for the company to lift each barrel of oil, compared with the $62 price per barrel on world markets, resulting in vast profits.

Saudi Arabia values its state-owned oil company at $2 trillion but even a less generous $1.5 trillion would make it the world's largest IPO, CNBC reported.

Salah Shamma, head of investment, MENA, at Franklin Templeton Emerging Markets Equity, said some local investors could be selling other shares in order to shift investments to Aramco, but this could well be a case of "short-term pain for long-term gain".

- No foreign listing for now - Sector experts say the IPO is planned in two stages, first on the Saudi stock market, followed by one next year of around three percent of Aramco's shares on a major global exchange, with London and NY tipped as leading candidates.

Final pricing for the IPO (initial public offering) is scheduled for December 5 and the world's most profitable company is expected to start trading on the Riyadh bourse six days later, the sources said.

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Rumayyan highlighted that Saudi Aramco will focus on knowing about the interests of its investors and the price range will be decided after that.

The world's largest crude oil producer said shares are being sold by the company's 100% shareholder - the Saudi government - through a number of banks.

Nearly every bank assumes Aramco will need to take debt this year and next year to cover spending and dividend payments.

In recent weeks analysts have privately estimated that the sale would deliver a lower valuation than the $2 trillion goal the prince set more than three years ago.

Initial hopes for a blockbuster global listing of about 5% were dashed when the share sale was halted previous year amid debate over where to list Aramco overseas.

"It's not a straightforward IPO - state links, human rights, geopolitical risks, environmental stuff - that's a lot of bad boxes ticked here for your average western fund manager".

Saudi Aramaco's initial public offering took a major step forward on Sunday and would likely need to address four sources of concern.

The question remains how the plan will change Aramco and the Kingdom.

  • Darren Santiago