The company has shelved plans for an overseas listing for now
Analysts S&P Global Ratings said the stock market debut could enable Saudi Arabia to strengthen its financial position. "If subsequently effectively deployed, the funds raised could be used to support longer-term economic growth in Saudi Arabia," it said. In its prospectus released last week, the company lists a variety of investment risks ranging from terrorist attacks to geopolitical tensions in a region dominated by Saudi-Iran rivalry. The 600-page prospectus also includes the government's control over oil output as another potential risk. After the flotation, Aramco will not list any more shares for six months, the prospectus says. Although one of the attractions for investors is the potential of high dividends, the document said Aramco has the right to change dividend policy without prior notice. Aramco has hired a host of international banking giants including Citibank, Credit Suisse and HSBC as financial advisers to assess interest in the share sale and set a price. Based on the level of interest. The sale of the company, first mooted four years ago, has been overshadowed by delays and criticism of corporate transparency at Saudi Arabia's crown jewel. Aramco last year posted $111bn in net profit. In the first nine months of this year, its net profit dropped 18% to $68bn. A third of Aramco's shares - about $8bn worth - will be sold to the man and (the prospectus says) even the divorced woman on the street, giving local Saudi Arabians a stake in their nation's cash cow for the first time. A TV and billboard advertising campaign, as well as social media, is stoking enthusiasm on the ground and demand is expected to be high. For the remaining $16bn, the oil giant is turning to institutional investors. And a source close to the company says there has been sufficient interest that they're confident they can cover most of this off within the Gulf. But there will be disappointment amongst officials if global demand is not there for the jewel in Saudi Arabia's crown. A fossil fuels company owned by an absolute monarchy in a volatile region are not an easy sell for many Western firms, pursuing the latest trend in investment policy of "ESG" (Environmental, Social and Governance) criteria. Norway's sovereign wealth fund is among those to already rule themselves out from investing. But the promise of sharing the promised annual $75bn cash dividend pot might be too good for some to miss, according to James Bevan, Chief Investment Officer at CCLA Investment Management (one of the UK's largest charity fund managers). Given his firm's focus, he is not looking to invest in the shares but explains why some are. "It's a 'risk' in the eyes of some investors to be very underweight in oil and gas, and Aramco may be a means of plugging a sector gap with perhaps less worry than associated with holding Gazprom," he says. Investors follow indixes - such as the FTSE 100 - which are made up of array of types of industries and so some feel oil and gas needs to be correspondingly represented in their portfolio. As Aramco's big sales pitch road show kicks off, the real test of investor appetite for the company will begin.DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
Latest Stories
-
CAFCL: Al Ahly set up historic final with ES Tunis
1 min -
We didn’t sneak out 10 BVDs; they were auctioned as obsolete equipment – EC
4 hours -
King Charles to resume public duties after progress in cancer treatment
4 hours -
Arda Guler scores on first start in La Liga as Madrid beat Real Sociedad
5 hours -
Fatawu Issahaku’s Leicester City secures Premier League promotion after Leeds defeat
5 hours -
Anticipation builds as Junior Speller hosts nationwide auditions
5 hours -
Etse Sikanku: The driver’s mate conundrum
6 hours -
IMF Deputy Chief worried large chunk of Eurobonds is used to service debt
6 hours -
Otumfuo Osei Tutu II celebrates 25 years of peaceful rule on golden stool
6 hours -
We have enough funds to pay accruing benefits; we’ve never missed pension payments since 1991 – SSNIT
7 hours -
Let’s embrace shared vision and propel National Banking College – First Deputy Governor
7 hours -
Liverpool agree compensation deal with Feyenoord for Slot
7 hours -
Ejisu by-election: There’s no evidence of NPP engaging in vote-buying – Ahiagbah
7 hours -
Ejisu by-election: Independent ex-NPP MP’s campaign team warns party against dubious tactics
8 hours -
ZEN Petroleum supports Tse-Addo Future Leaders School
9 hours