Saudi Arabia to offer .5% for public shares in Aramco

Nov. 9 (UPI) — Saudi Arabia plans to sell up to one-half of 1 percent of its oil company, Aramco, to individual investors, according to a prospectus released Saturday.

In what is expected to be the world’s largest initial public offering, the kingdom announced last Sunday it will sell the shares on the Saudi Stock Exchange, known as as Tadawul, in December.

The value of the company is valued between $2 trillion and $2.3 trillion, CNBC reported, compared with U.S. oil companies’ Exxon Mobil with a market cap of nearly $300 billion and Chevron at $229 billion.

If 0.5 percent is offered, that equates to $20 billion to $23 billion received in the Public Investment Fund.

Saudi Arabia owns about 18 percent of the world’s proven petroleum reserves: 260 billion barrels

“The price at which all subscribers in the offering will purchase shares, the number of shares to be sold and the percentage of the shares to be sold will be determined at the end of the book-building process,” Saudi Aramco said. “The offering is being made available to qualifying individual investors and institutional investors.”

Saudi-owned news channel Al Arabiya reported that subscription for investors would start Dec. 4 and Saudi Aramco shares wouldbeginning to trade on the Tadawul seven days later

J.P. Morgan, Goldman Sachs, Citigroup and Morgan Stanley are among the financial institutions underwriting the IPO.

The public offering of Aramco, which if official known as Saudi Arabian Oil Co., is part of the kingdom’s “Saudi Vision 2030” economic reform plans.

Last week, Aramco President and CEO Amin Nasser told CNBC that the public offering will help diversify the kingdom’s economy. In addition, the Saudi Arabia’s stock exchange will draw more domestic and international investment.

The oil and gas sector is half the country’s gross domestic product and about 70 percent of its export earnings.

However, crude prices remain about $20 a barrel lower than what the government wants.

Four years ago, Crown Prince Mohammed suggested selling a stake in the Saudi state crown jewel, with plans to list up to 5 percent of the company on the Tadawul and on one or more foreign stock exchanges.