Saudi Aramco which is responsible for ten percent of the world’s oil supply, has long been planning an initial public offering (IPO) for a number of years. Experts say that this IPO will be the largest in history. Saudi Aramco is finally confirming that it’s long anticipated IPO will commence from Nov 3.
Company records show that the Aramco’s net income was $111.1 billion in 2018 which gave it the title of being the most profitable company last year.
According to Fitch Ratings, a well-known credit rating agency, the company generated $224 billion in revenue before interest and taxes cut into the earnings.
That is more than double the earnings of Apple Inc in 2018 which stood at $82 billion. Exxon Mobil, another top earner in the United States brought in $40 billion. The high earnings was good enough for Fitch to award Saudi Aramco an A plus rating before its IPO this has since been downgraded to A.
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The upcoming IPO is not the first time that the company has flirted with the stock market. It recently raised $12 billion via its first international bond. The market responded well and saw it hit a demand of $100 billion. Many analysts felt that this was Aramco’s way of testing the market before its IPO.
The initial plan was for the IPO launch to take place in October. The plan was to use the third quarter results to bolster investor confidence. However, things did not go as per plan as terrorist attacks on September 14 devastated the company’s Abqaiq and Khurais plants which affected the company’s output. The plan was pushed back and the IPO launch is scheduled to take place in November.
November or December Launch?
Reuters has reported that the IPO launch process will start on November 3 but some other media outlets claim that a December 11 IPO launch is on the cards.
Crown Prince Mohammed bin Salman the man behind the IPO plan will be the final arbiter of the decision since he was the one who first announced the IPO back in 2016. This time the IPO launch delay has been caused by the prince’s dissatisfaction with the valuation of the company. He had hoped it would reach $2 trillion and seems to be hoping for additional factors to help raise the company’s value.
The Crown Prince is planning to use the windfall from the IPO to fuel reforms in the Saudi economy. After the initial listing on the Riyadh stock exchange, experts believe that Aramco will plan to sell next on an international market.
