Business Investment

Saudi Arabia taps Kingdom's richest to anchor Aramco IPO

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Tuesday 10, September 2019 BY Kuda Muzoriwa

Saudi Aramco aims to select underwriters this week and is considering selling shares on the Tadawul this year or early next, with a potential international listing at a later date.

Saudi Arabia held discussions with some of the Kingdom’s wealthiest families about becoming anchor investors in Saudi Aramco’s mammoth stake sale, reported Bloomberg.

The Kingdom’s officials made initial contact with some top business families on behalf of the oil giant and Saudi Aramco is expected to hold more formal meetings next week after banks have been hired for the sale.

The Kingdom is aiming to raise at least one to two per cent of Saudi Aramco from these investors and the amount each family invests will likely hinge on the company’s valuation.

Saudi Arabia is turning to its wealthiest families to ensure there is enough demand for what could be the biggest initial public offering (IPO).

Anchor investors usually commit to buying shares in a company before an IPO is opened up to other investors to control pricing and ensure that the sale is successful.

Saudi Arabia’s Crown Prince Mohammed Bin Salman, the architect of the IPO plan, has said that he expects the state-owned oil company to be valued at over $2 trillion, but analysts see $1.5 trillion as more realistic.

Selling a stake in Saudi Aramco is a key part of the Crown Prince Mohammed’s blueprint to wean off its reliance on oil, with the proceeds expected to be invested back into the economy. Plans for the IPO were put on hold last year as Saudi Aramco focused on the $69 billion acquisition of a majority stake in SABIC.

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