The government of Saudi Arabia plans to sell two percent of state oil giant Aramco in a domestic listing on December 11, but restrictions on future share sales mean an international IPO is ruled out for at least a year, sources told the Reuters News Agency.
Final pricing for the initial public offering (IPO) 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.
The Saudi government will face a one-year restriction on selling more Aramco shares following the domestic listing, meaning that any overseas IPO is unlikely to be held in 2020.
Aramco declined to comment, while the Saudi government’s media office did not immediately respond to a request for comment.
The state oil giant fired the starting gun on the domestic IPO on Sunday after a series of false starts. However, it did not give precise details on how much of the company would be sold, and expert valuations of the company vary wildly – from around $1.2 to $2.3 trillion.
Initial hopes for a five-percent IPO on domestic and international bourses were dashed last year when the process was halted amid debate over where to list Aramco overseas.
Aramco said the IPO timetable was delayed because it began a process to acquire a 70 percent stake in petrochemicals maker Saudi Basic Industries Corp.
Sunday’s announcement had said Aramco would be subject to restrictions on the sale, disposition or issuance of additional shares, but did not initially provide specifics on the lock-up period.
Aramco roadshows for the IPO will reportedly begin on November 18.
Crown Prince Mohammed bin Salman is seeking to raise billions of dollars to diversify the Saudi economy away from oil by investing in non-energy industries.
But bankers have told the Saudi government that investors will likely value the company at around $1.5 trillion, below the two-trillion-dollar valuation touted by Crown Prince Mohammed when he first floated the idea of an IPO nearly four years ago.
If the oil company offers one to two percent of its shares on the local bourse, it will raise as much as $20bn to $40bn.
A deal over $25bn would top the record-breaking IPO for Chinese e-commerce giant Alibaba in 2014.
A two-trillion-dollar valuation – now almost fanciful – would be almost twice that of Microsoft, currently the world’s most valuable listed company, and seven times that of Exxon Mobil Corp, the biggest listed oil major by market capitalisation.
The Saudi government is looking to list two percent of the company on the Saudi bourse though, rather than the entire share capital – as fully public companies normally do – on the exchange.