Saudi Arabia has placed a preliminary valuation of between $1.6 trillion and $1.7 trillion on state oil company Saudi Aramco.
The preliminary valuation of up to $1.7 trillion for Saudi Aramco is short of the $2 trillion valuation that Saudi Arabia's Crown Prince Mohammed bin Salman was reportedly keen to achieve.
In an updated prospectus it published for its initial public offering (IPO), Saudi Aramco is eyeing over $25 billion for 1.5% of its shares to be sold to investors.
In a statement, the state oil company said: "The base offer size will be 1.5% of the company's outstanding shares." The price range set for the IPO is at a range of 30 to 32 Saudi riyals per share or $8 to $8.5, which could value the offering at up to 96 billion riyals or $25.60 billion at the top end of the range.
If the top end price will be applied, the IPO could break the record IPO by Chinese e-commerce giant Alibaba in 2014, which amounted to $25 billion.
Initially, Aramco was expected to sell 5% of its shares on two exchanges, in which 2% will listed on Saudi's Tadawul bourse while the other 3% will be sold on an overseas exchange. However, the oil giant now says it has no plans for an international sale.
Last week, Saudi Aramco, the world’s most profitable company, announced that it will launch the largest IPO ever, despite offering less than 1% of the company shares. The company announced that the offering period will begin on November 17 and close on December 4.
According to the company’s prospectus, the company will price its shares on December 5 while it is expected to start trading on the Tadawul, the Saudi stock exchange, in mid-December. The IPO will have one class of ordinary shares and each share entitles a shareholder to one vote at the general assemblies.
The funds raised from the IPO will be used by the crown prince to diversify the Saudi economy away from oil by investing in non-energy industries.
