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Saudi Aramco record IPO starts November 17, offer size pending

November 11/2019

MOSCOW (MRC) -- Saudi Aramco will allow investors to start bidding for shares in the worlds most-profitable company from November 17, reported Bloomberg.

It left potential buyers in the dark about the size of the stake it plans to sell and the pricing range.

The Saudi stock exchange rules prohibits the oil giant from listing additional shares for six months after the start of trading, according to its more than 650-page prospectus. Also, the Saudi government, the companys sole owner, wont offer any additional shares during the 12-month period after listing, but retains the right to sell to foreign governments or investors affiliated with foreign governments.

Saudi Arabia is pulling out all the stops to ensure the success of the IPO after Crown Prince Mohammed bin Salman finally decided to offer shares in the worlds largest oil producer. The kingdom cut taxes on Aramco for a third time, revealed incentives for investors not to sell shares and is considering boosting dividends further.

While the prospectus includes Aramcos profits for the first nine months and details of the companys operations, it doesnt include any indication of what valuation the government hopes to achieve. Price guidance for the share sale is expected next week, but people familiar with the deal have told Bloomberg that Crown Prince Mohammed bin Salman would be satisfied with a valuation of between USD1.6 trillion and USd1.8 trillion.

"This lack of clarity in the prospectus shouldnt alarm us as its a book building exercise and lets be clear Saudi will do whatever it takes to make this IPO successful because so much hinges on it," Nasser Saidi, president of Nasser Saidi & Associates said in an interview on Bloomberg TV on Sunday. "This is part of an overall privatization program, which has often been delayed so now were getting to the beginning of that program."

Analysts from 16 banks have offered a valuation on the company, ranging in estimates from USD1.1 trillion at the bottom right up to USD2.5 trillion. The midpoint was USD1.75 trillion, according to people whove reviewed all the research.

Aramco earned net income of USD68.2 billion in the first nine months compared with USD83.1 billion a year ago. Revenue slipped to USD217 billion from USD233 billion.

As MRC informed earlier, last week, Saudi Aramco approached Malaysian state energy company Petronas to participate in Aramcos IPO, Petronas said, as the Middle Eastern oil giant seeks cornerstone investors for the listing.

Besides, we remind that Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, is running its local refineries at full capacity and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia next year. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.

The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year.  Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, ethylene, petrochemistry, Petronas, PRefChem, Saudi Aramco, Malaysia, Russia, Saudi Arabia.
Category:General News
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