Japanese companies likely to spurn Saudi Aramco IPO - JXTG president

Daniel Fowler
November 10, 2019

Saudi Arabia's state-owned oil giant Aramco revealed it will sell up to 0.5% of its shares to individual investors, but in a lengthy document published late Saturday it did not disclose how much of the company will be floated when it goes public on the country's domestic exchange.

The offering for institutional investors will begin on November 17 and end on December 4, while retail investors will be able to bid for the shares from November 17 to November 28, the prospectus said.

The offering period for individual subscribers begins on November 17 and closes at the end of November 28.

But the 600-page prospectus did not say how much of the Saudi firm would be sold, nor the date of the listing. Aramco also said it will determine the percentage to be sold to institutional investors after consultations with its financial advisers and global coordinators, according to AFP.

Reuters reported last month that Aramco can take advantage of new market rules that allow issuers the flexibility to sell more shares to retail investors, likely exceeding the usual 10 per cent seen in recent IPOs.

There are concerns about the extent to which the interests of new investors in the company will be protected, the NYT said.

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Meanwhile, adding that Japanese would unlikely to invest on Saudi Aramco IPO, JXTG Holdings' President, Tsutomu Sugimori said in an earnings' briefing on Friday (November 8th), "Japanese companies have stakeholders and they need good reasons to explain to shareholders why they would make such hefty investments and we need to do strict due diligence". Aramco will price its shares on December 5, according to the document.

The prospectus said the government will have a "statutory lockup period" for disposing of any shares after the listing for six months, and a contractual lockup period for 12 months.

In an online roadshow presentation last week, Aramco said the oil giant is worth $1.5 trillion at an oil price of $45 a barrel; $1.76 trillion at $65; and $2.1 trillion at $75.

At the top valuation of $2 billion, Aramco could potentially raise $40 billion, topping the record-breaking $25 billion raised by Chinese e-commerce giant Alibaba BABA.N in 2014.

The valuation would be nearly twice that of Microsoft, now the world's most valuable listed company, and seven times that of Exxon Mobil, the biggest listed oil major by market capitalisation.

Profit in the first half of this year was measured at $46.9 billion (€42.5 billion), exceeding that of the world's most profitable listed company, U.S. tech giant Apple Inc., which made $31.5 billion (€28.6 billion).

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