Range bound

17 November 2019 By George Hay Follow @gfhay

The Saudi oil giant will offer shares below the $2 trln valuation originally sought by the kingdom’s crown prince. But selling just a 1.5% slice implies the price range is still too rich for foreign investors. The mega-IPO is moving closer towards being a largely domestic affair.

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Saudi Aramco said on Nov. 17 it plans to sell 1.5% of the company at a range of 30 riyals to 32 riyals ($8 to $8.5) per share. That would value the oil giant’s initial public offering at as much as 96 billion riyals ($25.6 billion) and give the company a potential market value of between $1.6 trillion and $1.7 trillion.

In its original prospectus, published on Nov. 9, Aramco said the domestic IPO would be made to institutional investors outside the United States according to Regulation S of the United States Securities Act of 1933, and inside the United States under the Rule 144A of the U.S. Securities Act.

But in an addendum to the IPO prospectus on Nov. 17, Aramco said that it had removed any reference to such regulations, which three people familiar with the matter told Reuters suggested there would not be any international roadshows to market the shares.

Reuters reported on Nov. 15 that MSCI, the world’s biggest index provider, would follow in the footsteps of S&P Dow Jones and FTSE Russell, which told clients this week they could fast-track Aramco’s inclusion into their indexes as soon as December.

MSCI, whose indexes are used by funds with trillions of dollars in assets globally, said that if Aramco starts trading on or before Dec. 12, it would add it to the MSCI Equity Indexes from Dec. 17.

Aramco is yet to name any cornerstone investors in the deal.

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