Fischer Black famously defined an efficient market as “one in which price is within a factor of 2 of value, i.e., the price is more than half of value and less than twice value,” and I certainly would not aspire to any greater precision. By that standard, the initial public offering of Saudi Aramco is going great:
- Saudi Aramco may be worth as little as $1.5 trillion or even less, well below the target set by the kingdom, according to research sent on Sunday to potential investors by the banks involved in the company’s initial public offering.
- The research, according to multiple investors who reviewed it, suggests the banks are struggling to pinpoint a precise valuation for Aramco. Some banks offered a huge range -- as much as $1 trillion in the case of Bank of America -- between their low and high estimates. …
- BofA put the valuation of Aramco at $1.22 trillion as a low case scenario and $2.27 trillion as a high case — a huge gap that’s more than enough to fit the combined market capitalizations of Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp, the world’s three largest publicly listed energy companies. ...
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