TEHRAN (Iran News) – Saudi Crown Prince Mohammed bin Salman finally gave the go-ahead for the initial public offering of Aramco. The crown prince made the decision of Aramco IPO at a meeting he chaired on Friday and an official announcement is likely as soon as Sunday, according to people familiar with the matter, who […]
TEHRAN (Iran News) – Saudi Crown Prince Mohammed bin Salman finally gave the go-ahead for the initial public offering of Aramco.
The crown prince made the decision of Aramco IPO at a meeting he chaired on Friday and an official announcement is likely as soon as Sunday, according to people familiar with the matter, who asked not to be named before an official statement, Bloomberg reported.
The partial privatization will be a deal like few others and the biggest change to Saudi oil industry since the company was nationalized in the 1970s. Aramco, which pumps 10% of the world’s oil from giant fields beneath the kingdom’s barren deserts, is the backbone of the kingdom’s economic and social stability.
First suggested by the prince in 2016, Aramco IPO was delayed several times as international investors balked at the $2 trillion valuation he placed on the company. An earlier plan to kick off the share sale in mid-October was shelved after bankers received lukewarm interest from money managers, and the deal will likely rely heavily on Saudi money.
It is not clear if the prince is willing to accept a lower valuation, but he may need to be satisfied with a figure closer to $1.7 trillion, if he wants the deal to go ahead, people have said.
In a bid to make the stock more attractive, Aramco plans to pay $75 billion in dividends next year. That would give investors a yield of 3.75% if the company achieves its ambition of a $2 trillion valuation. That’s a decent payout in a low-interest-rate world, but it’s a lower dividend yield than at other big oil firms.
Investors who buy into the IPO have been guaranteed that the dividend won’t fall until after 2024, regardless of what happens to oil prices. Instead, Aramco will cut back on payouts to the government if it has to reduce the total dividend to less than $75 billion.
- source : Tasnim, Irannews
