Saudi Arabia has announced its plans to list its state-owned oil company Saudi Aramco on the domestic stock exchange, in what could be one of the largest initial public offerings (IPOs). The IPO would be split into two tranches, one for institutional investors and one for individual investors; Saudi investors and nationals would be eligible to bonus shares (up to 100 bonus shares for every 10 allotted shares). The timeframe of the operation and the volume of shares to be listed were not specified. The IPO prospectus could be released on 9 November 2019.
In 2018, the Saudi government discussed floating 5% of the company to raise as much as US$100bn, which would value the company at nearly US$2,000bn, while some analysts believe US$1,500bn to be a more realistic valuation for the group. In July 2019, Saudi Aramco had confirmed plans to launch an IPO in 2020-2021, once the acquisition of a 70% stake in Saudi petrochemical group SABIC will be completed. The IPO plans have met hurdles, due to concerns about legal complications in the United States, doubts over the valuation and recent attacks on Saudi oil facilities (September 2019).
Consequently, Saudi Aramco has been seeking to attract more investors, cutting the royalties paid to the Saudi government and approving a progressive royalty scheme (marginal rate of 15% up to US$70/bbl, 45% between US$70 and US$100/bbl and 80% above US$100/bbl) as of 1 January 2020.