That’s no moon, That’s Aramco.
Saudi Aramco.
Sorry to mix genres, but the upcoming Aramco float is bigger than Ben Hur.
To put it into perspective, Saudi Aramco is the world’s number 1 producer of crude oil and condensate, producing 13.2 million barrels per day of oil equivalent in the first 6 months of this year, and boasting 256.9 billion barrels of oil equivalent in reserves (proved reserves life of 52 years, dwarfing the other major producers put together) and it claims to be the lowest cost producer, globally.
Oh, and it is owned by the Government of the Kingdom of Saudi Arabia.
Yep, pretty much the death star if there ever was one.
Here’s its most recent 9 month scorecard.
And here’s last year’s effort.
That’s more than 2 Apples in terms of net income and free cash flow.
It’s no surprise that the proposed IPO is a sell down (not a new issue) with the proceeds going to Saudi Arabia to help diversify its petro-economy.
In January 2018 I wrote about this planned IPO and that many foreign stock markets were jockeying to get the float. This was just before there was some re-stacking of deck chairs in the Royal household.
However, Aramco will float (if it floats) in Riyadh, under the watchful eye of the Sovereign and an army of book runners - and the list is very long.
Back in January ‘18 I wondered whether the $2 trillion valuation would withstand scrutiny.
At this time, bets are on for somewhere between $1.5 trillion and $1.7 trillion, however I’ve seen some calls at the $1.2 trillion level.
However, the final offer price, number of shares to be sold and percentage of shares to be sold will be determined at the end of the book build, which if it goes ahead will finally set a value on what may be the world’s most highly valued company.
But it’s ironic that it’s not a tech titan. Rather, Aramco was built from oil and will be floated on the back of deep wells of almost zero cost/value money, courtesy of QE.
Shows we haven’t come very far, right?
We shall have to wait and see how well it spins out, but with such an imperious force of bankers involved, subscriptions will no doubt be brisk and expertly choreographed to the Star Wars Imperial Death March.
Mike.
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