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Saudi Aramco flotation valued at $1.7 trillion



Saudi Aramco’s planned flotation has been given a preliminary valuation of $1.7 trillion - making it the world’s biggest initial public offering (IPO).

Saudi Aramco, the world's most profitable company, is set to make the world's biggest IPO at $1.7 trillion

The state-run oil company is one of the world’s most profitable companies, having made $111 billion in profit in 2018. However, the firm hopes to raise billions of dollars from outside investors to diversify through expansion into non-oil industries.

The company officially announced its IPO intentions on 3rd November 2019, and the valuation was announced on 17th November. 

Despite the record-breaking valuation, the figure did not match the hopes of Crown Prince Mohammed bin-Salman, who sought to reach $2 trillion. Aramco hope to raise more than $30 billion for the government by selling a stake that will help modernise the Saudi economy. 

The company was initially planning a formal investor roadshow across Asia, the US and Europe, but has now ruled that out, preferring to keep investment within the Kingdom of Saudi Arabia and the Gulf region.

The firm says it plans to sell 1.5% of the company, totalling 3 billion shares at an indicative price range of 30-32 riyals ($8-$8.5), allowing them to achieve their investment target of $25 billion.

This money, the company say, will be used to create new jobs in areas outside Oil as the firm seeks to diversify its portfolio. It will also go towards economic reforms across Saudi Arabia, strengthening its global financial position.

“If subsequently effectively deployed, the funds raised could be used to support longer-term economic growth in Saudi Arabia,” commented analysts S&P Global Ratings.

The shares are due to go on sale in December.

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Saudi Aramco flotation valued at $1.7 trillion - Time to read 2 min
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