Saudi Aramco, an oil giant, is expected to set a new record for IPO

Saudi Aramco, the world's largest oil company, will make an initial public offering. According to a report on November 3, Saudi market regulators have approved the oil giant's application for listing on the Riyadh stock exchange to build a listed company with the highest market value in the world. Saudi Aramco did not give a specific time frame or disclose how many shares it would sell, but sources said the company may sell 1% - 2% of its shares on the local exchange, raising up to $20-40 billion, which also makes the IPO expected to be the largest ever. According to Saudi Aramco, the IPO will be divided into two parts: institutional investors and individual investors. The company added in a statement that the proportion of shares sold and the purchase price will be determined after the end of the inquiry period. According to the statement of the Saudi capital market authority, Saudi Aramco will be listed on the Riyadh stock exchange in the first phase, but the statement does not specify the specific shares of the listed shares of the company. On November 1, the Saudi government held the final meeting around the IPO of Aramco, which was mainly to decide whether to promote the listing of Aramco. One of the sources said that Saudi Crown Prince Mohammed bin Salman "gave a green light" for the IPO of Aramco on the same day.

It is reported that the IPO of the world's most profitable company aims to diversify Saudi Arabia's economy by raising funds, thus speeding up the economic reform process of crown prince Mohammed bin Salman. In 2016, Saudi Crown Prince Mohammed bin Salman put forward the economic reform plan "vision 2030", aiming to make Saudi Arabia get rid of the dependence on oil revenue for a long time, and promoting the listing of Saudi Aramco is an important part of it. Previously, Saudi Aramco was officially valued at US $2 trillion. However, due to the global economic environment and recent attacks on Saudi oil facilities, many investment institutions set the company's valuation at US $1.5 trillion. However, even with a valuation of $1.5 trillion, the market value of Aramco will still be at least 50% higher than that of Microsoft and apple, the most valuable companies in the world. At present, the market values of Microsoft and apple are about $1 trillion respectively. It is reported that if only 1% of the shares are sold, Aramco can only raise about $15 billion, which will be far lower than the record $25 billion raised by Alibaba, the Chinese e-commerce giant, in its 2014 IPO. However, the sale of 2% of Aramco's shares at a valuation of $1.5 trillion would surpass Alibaba's largest ever IPO. There have been reports in the media before that the Saudi government plans to put 5% of the shares of Aramco into the stock market through IPO, sell 2% of the shares on the Saudi stock exchange, and sell the remaining 3% on the overseas stock exchange. For the IPO plan, Saudi Aramco also released its first semi annual financial report. According to the data, in the first half of 2019, Saudi Aramco's net profit reached US $46.9 billion, its income before interest and tax was US $92.5 billion, and its free cash flow reached US $38 billion. In comparison, in the first half of this year, apple, with a market value of nearly US $1 trillion, realized a net profit of US $21.6 billion. As an oil company, shell's net profit attributable to shareholders was US $8.999 billion, Chevron's net profit was US $6.932 billion, and ExxonMobil's net profit was US $5.48 billion.