Saudi Arabia is pushing for a billion-dollar valuation of the oil company Aramco


Berlin Saudi Aramco is a superlative company. With $ 111.1 billion, he made as much profit in 2018 as he did Apple. Google and the US oil giant Exxon-Mobil together.

With almost ten million barrels (159 liters each) per day, the world's most profitable corporation promotes far more crude oil than any other company, about one tenth of global oil consumption. And with 336 billion barrels of reserves, Aramco, which has the sole license to produce oil in Saudi Arabia, has the largest reserves.

The long planned IPO of the company should therefore actually go over the stage. But there is a big problem: Mohammed bin Salman, the powerful Crown Prince of the Kingdom and Chairman of the Public Investment Fund (PIF), the Aramco owner, has been calling for a two-trillion dollar valuation of the mega-corporation since the announcement of the stock market bulletin. Since analysts see the real Aramco value but rather at 1.5 trillion, the initial public offering (IPO) has been postponed again and again.

Zankapfel rating

On Thursday, the Aramco board, the board and leadership of PIF governor Yasir Al-Rumayyan, convened with the 25 investment banks and financial advisors hired for the IPO. On Friday, analyst reports from the banks involved will be published. And on Sunday, the IPO will be officially announced. The size of the stake to be placed on the Riyadh (Tadawul) Stock Exchange should be clear a week later at the latest when the prospectus is published.

A further placement on foreign stock exchanges should take place in 2020, according to people involved in the IPO. Calculated with a first placement of up to three percent of Aramco shares.

But even with the initial issue of only two percent and the hoped-for valuation of the group with two trillion dollars, the Aramco IPO with 40 billion dollars would be the world's largest IPO. The Chinese Internet retailer Alibaba had 25 billion and the Japanese SoftbankGroup recorded $ 21 billion for its telecom group.

But enormous risks weigh on the Aramco IPO: "Geopolitical uncertainties" and the bad environment due to the US-China trade war, Naeem Aslam, an analyst at ThinkMarkets in London, in the field. Other analysts are bothered by the relatively low price of oil. In addition, Aramco's major oil rigs were destroyed on 14 September in a drone and rocket attack suspected of invading Iran. And analysts of the rating agency Fitch see possible further attacks as a risk for Aramco.


On top of that, there is a miserable stock market environment: since the four-year peak in May, the prices of Saudi shares listed on the Tadawul, the local stock exchange, have fallen sharply. However, in order to make the Aramco IPO a success and achieve a high valuation, the government is doing a great deal: it has significantly reduced the tax burden and royalties payments and guaranteed a $ 75 billion dividend by 2020.

Even so, even with a 3.75 percent return on the company's $ 2 trillion in dividends, even that dividend would be well below that of competitors such as Shell (6.2 percent) or Exxon-Mobil (4.9 percent). But: "Government help is not enough for the stock price if the headwind is too strong," says Hasimer Malik, share strategist of Tellimer in Dubai.

Families should draw

And so Riyadh is putting pressure on wealthy Saudi families, some of whom were arrested in 2017/18 and sometimes held for months in Riad's Ritz-Carlton luxury hotel, are being blackmailed. They should buy Aramco shares or exchange their frozen for the release from the Ritz, frozen assets in Aramco shares, it is said in an insider on condition that they are not quoted by name.

Also, sovereign wealth funds in friendly and dependent countries such as Kuwait or the United Arab Emirates are being forced to invest, as are major clients such as Chinese or Japanese oil companies. Just before the first presidency of Saudi Arabia in the G20 group in 2020, the king wants his country to have the most valuable company in the world publicly visible with Aramco.

More: Geopolitical analysis to attack the heart of the Saudi oil industry

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