The Big Listing

Saudi Arabia’s historic decision to list part of energy giant Aramco is expected to lead to the biggest IPO in the world. Gulf Business looks at what this could mean for the future of the kingdom

- Emma Hodgson

SAUDI Aramco is the most profitable company in the world, dwarfing all its competitors. In 2018 alone, the Saudi giant (with net earnings for the year standing at $111.1bn) made more than Apple, Google and ExxonMobil combined. However, despite its profitability, the recent Aramco IPO announcement sent ripples around the world, pluralising opinion. Bookrunning for the IPO began on November 17, and ended for retail investors on November 28. It is is due to end for institutional investors on December 4, with the final share price available from December 5, just in time for the next OPEC general meeting. The meeting, set to be held the following day in Vienna, Austria, will see key players in the global oil industry gather to agree on oil supply policy for 2020.

Predictions suggest that the IPO – which has been four years in the making– is likely to result in the oil giant being listed on Saudi Arabia’s Tadawul stock exchange by the second week of December. The result would be a potential 1,500 foreign investors in the Saudi-based company for the first time in more than 30 years.

Although the number of shares initially available in Saudi Aramco (predicted to be around 1-3 per cent) represents a relatively small part of the company, the move could still have significant implications for the wider Saudi economy. Vijay Valecha, the chief investment officer at Century Financial explains: “With the offering likely to become the world’s largest, the listing will boost the overall foreign participation in the Saudi markets. Arguably, this will be further boosted by the inclusion of Saudi Arabia in the MSCI Emerging Markets index. Over the long term, the IPO will most likely lead to better integration of the Saudi economy with the outside world.”