Monday 18 November 2019 12:27 pm

Saudi Aramco bets on local demand as it cancels European IPO roadshow

Saudi Aramco this morning cancelled plans for its European roadshow for its long-delayed initial public offering (IPO), a day after doing the same for investor meetings in the US and Asia.

The decision, which was reported by the Financial Times, means that shares will not be formally marketed outside of the Gulf.

Read more: Saudi Aramo set for $1.7 trillion valuation

Meetings will now only take place in Saudi Arabia, the UAE, Bahrain, Kuwait and Oman. 

The success of the IPO will now depend on local demand, with 0.5 per cent of shares reserved for Saudi nationals, who will then get access to a bonus share scheme as long as they maintain their stock for a fixed period. 

On Sunday, Aramco, which is the world’s largest oil producer, released the official price range for the sale, which would value the company at $1.7 trillion.

The kingdom’s leadership were told that this was still higher than foreign institutions were willing to pay, two people familiar with the matter told the Financial Times.

In a statement the company said that it would sell 1.5 per cent of the company’s shares on Riyadh’s Tadawul exchange at a price of 30 to 32 riyals.

At the top end of the price range a sale of this size would give the oil giant a value of $25.6bn, just surpassing the $25bn raised by Chinese retailer Alibaba in its debut in New York in 2014. 

Read more: Saudi Aramco IPO: the pros and cons

Although this would make the IPO the largest of all time, it falls well short of initial plans, which would have seen the company sell a reported 5 per cent of shares, raising nearly $100bn in the process.

The sale is central to Crown Prince Mohammed bin Salman’s plan to diversify the gulf state’s economy away from oil.

Saudi Aramco declined to comment at this stage.

Main image credit: Getty