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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Saudi Aramco prospectus flags risks, gives few details on IPO size

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DUBAI: Saudi state oil giant Aramco will sell 0.5 per cent of its shares to individual retail investors and the government will have a lockup period of a year on further share sales after the initial public offering, its prospectus said. The more than 600-page prospectus did not include details of how much of the company would be floated in total or of any commitments from anchor investors.


Sources have said the company could sell 1 per cent to 2 per cent on the Saudi stock market in what could be the world’s largest listing.


Offering for the shares will begin on November 17, the prospectus said.


Aramco fired the starting gun on the initial public offering (IPO) on November 3 after a series of false starts. 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.


Among the risks highlighted in the prospectus were the potential for terrorist attacks and the potential for encountering antitrust legislation, as well as the right of the Saudi government to decide maximum crude output and direct Aramco to undertake projects outside its core business.


Aramco may also change its dividend policy without prior notice to its minority shareholders, it said. Aramco’s oil facilities were targeted on September 14 in unprecedented attacks that temporarily shut 5.7 million barrels per day (bpd) of output — more than 5 per cent of global oil supply.


The prospectus said the government will have a “statutory lockup period” for disposing of any shares after the listing for six months, and a contractual lockup period for 12 months.


Aramco cannot list additional shares for a period of six months after trading starts, and will also be restricted from issuing additional shares for 12 months.


The offering for institutional investors will begin on November 17 and end on December 4, while retail investors will be able to bid for the shares from November 17 to November 28, the prospectus said.


“Aramco IPO is an opportunity that shouldnt be missed, the largest company in the world....holding aramco shares is an absolute gain”, a Saudi with a twitter handle named Abdulrahman wrote.


Aramco has been in talks with Gulf and Asian sovereign wealth funds and wealthy Saudi individuals to secure top investors of the IPO, but no anchor investor is yet to formally agree to a deal.


The Russia-China Investment Fund is working to attract Chinese investors for Aramco’s planned IPO, the head of Russia’s RDIF sovereign wealth fund said.


Bankers have told the Saudi government that investors will likely value the company at around $1.5 trillion, below the $2 trillion valuation touted by Prince Mohammed when he first floated the idea of an IPO nearly four years ago. — Reuters


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