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25 November 2019

Saudi Aramco markets IPO to investors in Dubai, after talks with Kuwait fund

The deal is the centrepiece of Crown Prince Mohammed bin Salman’s plans to diversify the Saudi economy away from its reliance on oil.

Bloomberg/Mohammed Al-Nemer

by Kudakwashe Muzoriwa

Saudi Aramco officials met investors in Dubai in a sales push for an initial public offering (IPO) that could be the world’s largest, after trying to secure demand from Kuwait Investment Authority (KIA) for the deal, worth up to $25.6 billion which relies heavily on local and regional buyers reported Bloomberg.

A Kuwaiti daily said that the Kuwait sovereign wealth fund’s decision to participate in the deal or not will depend on a ‘study’ of the IPO.

The investor meetings are Saudi Aramco’s first outside Saudi Arabia since the world’s most profitable company said earlier this month it would sell 1.5 per cent of its stock. The state-owned oil giant’s executives including Chief Financial Officer Khalid Al-Dabbagh briefed potential investors on strategy and dividend plans.

UAE-based investors left the briefings at the Ritz-Carlton hotel in Dubai’s financial district with printed copies of the company’s more-than-600-page prospectus. The meetings were invitation-only, and the executives said they did not receive any new information.

Saudi Arabia planned the oil producer’s IPO as a cornerstone of its economic diversification plans, using the company’s oil wealth to attract foreign capital to the country. Even after the oil giant set its valuation at lower than the initially mooted $2 trillion, Wall Street’s top banks have struggled to bring in foreign investors.

Malaysia’s state energy company Petroliam Nasional was one of the latest to decide against participating in the IPO. Some investors leaving the Dubai meeting said they were positive about Saudi Aramco’s prospects and would consider investing.

The price range for the share offering values the company between $1.6 trillion and $1.71 trillion. If Saudi Aramco achieves the higher end of that range, proceeds from the sale could exceed the previous record of $25 billion raised by Alibaba Group Holding in 2014.

RELATED STORIES: Saudi Aramco Petroliam Nasional IPO Kuwait Investment Authority





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