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Saudi Aramco valued at $1.7 trillion ahead of flotation

By Hugh Wilson

State-owned oil giant hopes to raise $25 billion in stock market debut

Oil giant Saudi Aramco has valued itself at $1.7tn (£1.3tn, €1.5tn) ahead of potentially the world’s biggest initial public offering next month.

A statement from the company set the price range at $8-8.5 a share, which would value the IPO at $25.6 billion at the top of the range. With three billion shares up for grabs, that would beat the previous record for an IPO of $21.8 billion raised by Chinese e-commerce business Alibaba in 2014.

The valuation is well below the $2tn target set by Crown Prince Mohammed bin Salman, with many international investors steering clear of the IPO for now.

Western investors are thought to be concerned about the company’s state ownership and geopolitical volatility in the Middle East. Some were also put off by the IPO’s listing on Riyadh’s Tadawul exchange rather than a major international equivalent.

Last week the company released a prospectus that warned of investment risks including terrorist attacks and climate change. Two of the company’s facilities were hit by a drone attack in September, temporarily halving the crude output of the world’s largest oil exporter.

The lukewarm response from Western investors has forced the company to focus on Middle Eastern institutional investors and ultra-high-net-worth individuals. Around 0.5 per cent of shares have been earmarked for Saudi retail investors.

Saudi Aramco will reveal the final share price early next month, though it has yet to confirm a date when shares will begin to trade.

FURTHER READING: Long-awaited listing of oil giant Aramco announced

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