All About That #Saudi Plan for the World's Biggest IPO - Bloomberg

All About That Saudi Plan for the World's Biggest IPO - Bloomberg:

The world’s most valuable company may not be Apple Inc. That crown could instead belong to Aramco, as Saudi Arabian Oil Co. is better known. The sprawling state-owned producer, sitting atop one-fifth of the globe’s petroleum reserves, pumps more crude than the top four publicly traded oil companies combined. Crown Prince Mohammed bin Salman, the Saudi king’s influential son, says the company is worth in excess of $2 trillion, almost double the size of Apple. A much-vaunted plan to sell shares of Aramco in 2018 got postponed, raising speculation that it might be dropped altogether, but Prince Mohammed insists that the biggest initial public offering “in human history” will go ahead.

The Situation 

The kingdom’s original plan, announced in 2016, was to sell up to 5 percent of Aramco, either on the Saudi bourse and one or two overseas exchanges, or solely on the domestic exchange. That’s been pushed back to late 2020 or early 2021 to allow Aramco time to fund and complete the purchase of a $69 billion stake in Saudi Arabia’s biggest petrochemical company. Aramco sold its first international dollar bond, raising $12 billion to help fund the purchase, which it aims to close in 2019. Global investors had also balked at the valuation, with some banks pricing a 5 percent stake at $50 billion to $75 billion — way short of the $100 billion-plus foreseen by the Crown Prince. Even so, the lowest valuation would still dwarf the world record for an IPO of $25 billion by Alibaba Group Holding Ltd. The aim of the share sale is to create a war chest and prepare the country for the post-hydrocarbon age. The brutal killing of Saudi columnist Jamal Khashoggi, which a UN report said warranted an investigation of the crown prince, threatened to derail a political agenda crowded with social and economic reforms at home and an assertive foreign policy. Still, investors have returned to the kingdom and Aramco has resumed discussions with lenders about the IPO.