Saudi Aramco formally starts IPO build-up

Aramco’s prospectus will be published prior to the start of the subscription period, the CMA said. (Reuters)
Updated 03 November 2019

Saudi Aramco formally starts IPO build-up

  • Percentage of local and international investors will be set later after IPO
  • No intention to list in foreign exchanges for now

DUBAI: Top Saudi Aramco officials on Sunday have announced that the company has received approval to publicly list shares at the Kingdom’s stock exchange, the Saudi Tadawul.

“Saudi Aramco has received the confirmation from Saudi Tadawul to list ... it will start the official IPO (process),” Yasir Othman Al-Rumayyan, Chairman of Saudi Aramco and Governor of the Public Investment Fund, said during a press conference in Dhahran.

“The biggest shareholder will be Saudi … One thing has not changed about the company, its constant desire for growth and expansion,” Rumayyan said. “Today, because of the IPO, new people can reap the benefits of Saudi Aramco.”

Rumayyan also said that: “Aramco’s listing in Tadawul shows that our country has become more attractive to international investors.” He added that there are no current plans for a foreign share listing and the shares offering would be limited to the Tadawul for now.

Rumayyan, responding to reporters’ questions, also said that the percentage of foreign/local investors was yet to be determined. “The percentage of local and international investors will be set later … after we are done with the public offering,” he said.

The offering price was also still to be determined, Rumayyan added.

Amin H. Nasser, the President and Chief Executive Officer of Saudi Aramco, meanwhile said: “Today the company … makes a new step to offer chances for Saudi nationals and others to own shares in Aramco.”

He also described the company’s research activities, which was “focused on advancing the technologies we use for filtration and creating more green technologies for oil filtration.” 

Nasser also mentioned the company’s intention to declare cash dividends of at least $75 billion.

An Aramco document stated: “Subject to the Board’s discretion after consideration of a number of factors, the Board intends to declare aggregate ordinary cash dividends of at least $75 billion with respect to calendar year 2020, in addition to any potential special dividends,” Aramco said.

“In addition, to the extent that the Board determines that the amount of any quarterly cash dividend declared with respect to calendar years 2020G through 2024G would have been less than $0.09375 per Share (based on 200,000,000,000 Shares outstanding) but for the Government forgoing its rights to such dividend as follows, the Government will forgo its right to receive the portion of cash dividends on its Shares equal to the amount necessary to enable the Company to first pay the minimum quarterly cash dividend amount described above to holders of Shares other than the Government,” the document said.

“The remaining amount available for distribution with respect to such quarter as determined by the Board in its discretion will then be distributed to the Government.”

Aramco’s share price, number of shares to sold and the percentage of shares to be sold will be determined at the end of the book-building period, the oil giant said. The share offering will be open to individual and institutional investors but “subject to restrictions on the sale, disposition or issuance of additional shares, the details of which will be provided in the prospectus.”

The share offering would be in two tranches: one for institutional subscribers eligible to participate in the book-building process and another for individual investors comprise of Saudi Arabian nationals, non-Saudi individuals who are residents in the Kingdom and any GCC national.

“An eligible retail bonus investor who has been allotted shares and continuously and uninterruptedly holds the allotted shares for 180 days from (and including) the first date of trading and listing on the exchange will be eligible to receive one share for every 10 allotted shares so held, up to a maximum 100 bonus shares,” Aramco said.

“An eligible bonus investor would be entitled to receive up to a maximum of 100 bonus shares only.”

The Aramco document pegged the company’s revenue as of the third quarter to $244 billion; net income at $68 billion and a free cash flow of $59 billion. Its capex was listed at $23 billion as of the nine-month period.

Saudi Arabia’s Capital Market Authority (CMA) earlier on Sunday issued a statement saying Saudi Aramco’s application for the registration and offering of part of its shares has been approved.

Aramco’s prospectus will be published prior to the start of the subscription period, a statement from the CMA said.

The prospectus includes all relevant information that the investor needs to know before making an investment decision, including the company’s financial statements, activities and management.

 

The CMA’s approval on the application is valid for 6 months from the CMA Board resolution date, and would be deemed cancelled if the offering and listing of the Aramco’s shares are not completed within this period.

The CMA in its statement said, “a subscription decision without reading the prospectus carefully or fully reviewing its content may involve high risk. Therefore, investors should carefully read the prospectus, which includes detailed information on the company, the offering and risk factors.

“Thus, providing potential investors the ability to evaluate the viability of investing in the offering, taking into consideration the associated risks. If the prospectus proves difficult to understand, it is recommended to consult with an authorized financial advisor prior to making any investment decision.”

The regulatory agency added that approval on the application should “never be considered as a recommendation to subscribe in the offering of any specific company.”

“The CMA’s approval on the application merely means that the legal requirements as per the Capital Market Law and its Implementing Regulations have been met,” it said.


RDIF chief praises Saudi reforms, says Bezos hacking story is ‘Fake News’

Updated 25 January 2020

RDIF chief praises Saudi reforms, says Bezos hacking story is ‘Fake News’

  • Kirill Dmitriev: Investors interested in business opportunities presented by tourism, improved position of women and youth demographic in Kingdom

DAVOS: One of Saudi Arabia’s biggest investment partners has reassured the global community about doing business in the Kingdom and ridiculed the Jeff Bezos accusations of phone hacking.
Speaking on the sidelines of the World Economic Forum (WEF) annual meeting in Davos, Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF), told Arab News that stories about the apparent hacking of Amazon boss Jeff Bezos’ phone did “not look plausible at all.
“We in Russia have some experience of phone hacking and this has all the signs of being fake news put about by enemies of the Kingdom.”
Dmitriev, whose organization has channeled investment into Saudi Arabia and partnered with the Kingdom on billions of dollars-worth of joint ventures, said the people he had spoken to in Davos remained in favor of the opportunities presented by Riyadh’s Vision 2030 strategy.
“Lots of people here are positive about the changes going on in Saudi Arabia, both from the West and Asia. They are interested in the business opportunities presented by tourism, the improved position of women and the youth demographic. I’m surprised the Western press does not give the full picture about what is happening in Saudi Arabia,” he added.
While in Switzerland, the RDIF announced a deal to invest in an online tourism platform that would benefit from increased Russian tourism, especially by members of Russia’s big Muslim minority, as well as other potential visitors to Saudi Arabia.
The Bezos allegations, which have been dismissed by Saudi officials as “absolutely silly,” were a hot topic of conversation at the WEF meeting.
A Western executive at a leading Gulf energy company, who declined to be named, said: “Phone hacking and cyber-security is a growing problem in the business world and is not confined to any one country.
“You have to take it all with a pinch of salt. If you’re going to do business in Saudi Arabia you will look at all the pros and cons, and this (the Bezos allegation) is not likely to deter you.”