Sunday 17 November 2019 11:22 am

Saudi Aramco set for $1.7 trillion valuation

Saudi Aramco has released the official price range for its long-awaited initial public offering (IPO) in December, giving the company a preliminary value between $1.6 trillion (£1.24 trillion) to $1.7 trillion.

Although this is considerably below the company’s desire for a $2 trillion valuation, it would still make the IPO the world’s biggest.

Read more: Saudi Aramco to offer retail investors $10bn worth of shares

In a statement on Sunday Aramco said that they would sell 1.5 per cent of the company’s shares on Riyadh’s Tadawul exchange at a price of 30 (£6.20) 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. 

The final offer price will be announced on 5 December. 

The sale is expected to be hugely popular with Saudi nationals, for whom 0.5 per cent of the shares have been reserved.

Retail investors have until Nov. 28 to sign up for the IPO while institutional investors can subscribe until Dec. 4, with company management going on marketing roadshows this week.

After much delay Aramco’s IPO process began on 3 November, with the sale a central pillar of Crown Price Mohammed bin Salman’s plan to diversify the gulf state’s economy away from oil.

There had been much speculation from investors as to the value of the world’s most profitable company, with a range as wide as $1.2 to $2.3 trillion.

Aramco, which produces 10 per cent of the world’s oil, was initially expected to sell up to 5 per cent of its shares, with both a local and an international offering. 

Read more: Saudi Aramco IPO gets the green light for December float

However, plans to list on an overseas exchange have now been shelved.

For the first nine months of 2019, Saudi Aramco’s income slipped from $83.3bn in 2018 to $68.2bn this year, with revenues down from $233.3bn to $217.1bn.

Main image credit: Getty