Saudi Aramco considers pricing at top to become worlds biggest IPO


Nevertheless, the company's IPO price is at the very top of likely expectations.

"We have received more enquiries", said Scott Bolton, director, crisis management at insurance broker Aon AON.N , adding that both domestic and worldwide companies were checking whether they were covered for such attacks.

Even at a $1.7 trillion valuations, worldwide institutions baulked, prompting Aramco to scrap roadshows in NY and London and focus instead on marketing a 1.5 per cent stake to Saudi investors and wealthy Gulf Arab allies.

It is noteworthy that Iran has denied any role in the attack on Saudi Arabia's oil fields by sending a diplomatic note to the US.

The Opec+ group, including both cartel members and other major exporters, reached a deal Friday to cut production by 500,000 barrels per day in a bid to prop up prices. An additional 450 million Aramco shares could be sold under an over-allotment option for underwriters, which would bring the total amount raised to almost $30 billion.

Global investors proved to be skittish over the earlier valuations offered by the Saudi government.

Despite its massive size, the deal will still fall considerably short of the soaring $2 trillion valuation long desired by Crown Prince Mohammed bin Salman.

Many investors may have problems investing in Aramco on an ethical basis - both climate change and due to Saudi Arabia's poor record on human rights.

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The International Monetary Fund in October cut the forecast for Saudi GDP growth in 2019 to just 0.2 percent from 1.8 percent a few months earlier.

The Aramco IPO is the centerpiece of Saudi Vision 2030, the kingdom's blueprint to wean off its reliance on oil and diversify its economy.

As Bloomberg Businessweek Economics Editor Peter Coy wrote: 'Saudi Aramco wanted to sell a lot of shares at a high price, but the smart money showed no interest.

Aramco put off but has not abandoned its plan to raise additional funds by selling shares on a major worldwide market like NY, but that will depend on the reception it will have on the local stock exchange.

To boost demand, authorities allowed lenders to provide credit for stock purchases at a proportion that was twice the usual for IPOs.

To encourage Saudi citizens to buy and keep hold of the stock, the company says it will pay a dividend of at least $75 billion in 2020.

Institutional investors, many of them Saudi or Gulf-based funds, raised more than $100 billion during the book-building period that closed last week.

Riyadh has gone quiet on when or where Aramco could list overseas. However, later the company made it clear that it does not plan to list shares in the global market. Presently, it doesn't have any immediate foreign exchange listing plans. "That's why this IPO or the public listing in Tadawul is one positive step, but it's insufficient".