Saudi Aramco takes another step toward 1st public offering

Saudi Aramco's facility in Saudi Arabia

The state-controlled oil company is to go ahead with the world's biggest listing Credit AFP

Aramco is the world's most profitable company and past year posted $111.1 billion in net profit.

Saudi Arabian state-owned oil company Aramco will sell up to 0.5% of its shares to individual retail investors in what could be the largest initial public offering (IPO) in history, it announced in a prospectus on Saturday.

Aramco does not appear to have any immediate plans to list more of the company on an worldwide exchange, although there have been talks with major exchanges in recent years.

The 658-page document, released just before midnight Saturday, said the final share price will be determined on December 5 - a day after the subscriptions close - in what is expected to be the world's biggest IPO. However, recent reports have suggested Saudi Aramco could its IPO into 2019 or even in favor of selling private shares to sovereign wealth funds.

Saudi Aramco's prospectus says all relevant regulatory and corporate approvals required for the offering have been granted and an announcement of final offer price will be December 5 2019, with bidding and book building period to run November 17 to December 4. 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. Brent crude shut Friday at all-around $62 a barrel.

"Apart from the oil price, of course, the main risks are the degree to which Aramco needs to shoulder the burden of OPEC Plus output restraint, allocation of capital into projects which maximise value for Saudi overall as opposed to Aramco minority shareholders, physical security risks and the dividend payout ratio in the long-term", said Hasnain Malik, head of equity strategy at Tellimer.

An attack on two key Aramco processing sites in September, which Saudi Arabia has blamed on its regional foe Iran, highlighted how the company's stability and security is directly linked to that of its owners - the Saudi government and its ruling family. Sources have said the company may sell 1-2 percent on the Saudi stock market in what could be the world's biggest listing.

The prospectus noted that the Saudi government ultimately decides the country's level of crude oil production. Saudi Arabia formally began off its very long-anticipated first common public that includes of its state-operate oil massive Saudi Aramco on Sunday, which can see a sliver of the group made out there on a group inventory alternate in hopes of boosting billions of for the dominion.

Other risks listed range from the fallout of climate change on the demand and price of oil to the potential disruption of Aramco oil production to terrorist attacks and other forms of armed conflict.

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