Saudi King Salman, right, and Crown Prince Mohammed bin Salman –
While the sale of Aramco, a government-owned Saudi Arabian Oil Company is speculated to reach an all-time high and break all records with an initial public offering it will also increase the valuation of the company making it 1.5 trillion. This is going to be the biggest IPO the world has ever seen and is much awaited by the investment and stock enthusiasts all across the globe.
Mildly enthusiastic about the new developments Salman Bajwa, Chief Executive officer of Dubai-based Emirates NBD Asset Management Ltd said that he believes that it is just one amongst the several other significant changes taking place. He pointed out to other major reforms that were taking place especially in the social, economic and in the market behavior and structure. He added that this Aramco IPO will be a testimonial to the fact that the significant structural reforms in the UAE market space has been completed as planned and most importantly successfully so.
Further, he went on to indicate that there will be other IPOs coming soon and are on their way and most of them are to be government-owned enterprises and entities. Emirates NBD Asset Management Ltd. has $4.8 billion of assets and CEO, Bajwa made these remarks just a week ago in an interview in his office.
Almost twice to that of Apple Inc., the market capitalization of Aramco will be massive and the magnitude of which could only be imagined from the fact that it will be 4 times bigger than the Exxon Mobil Co. Moreover, if we go by statistics, then it will alone be 20% of MSCI Emerging Markets Index, which values at $5.8 trillion as suggested by the data compiled by Bloomberg. This is a significant development while Saudi Arabia post changes in the government, is planning to sell several state held assets which also include stakes in stock exchanges, properties, popular football clubs and other industries. Putting a break to all guesswork and speculations, Amin Naseer, Chief executive officer Aramco said that they would be launching the IPO in the later half this year.
Going by the views of Salih Yilmaz an analyst working with Bloomberg intelligence, U.K – Saudi Arabia is expected to raise $75 billion and that comes by selling a mere 5 percent of their stake in Aramco and expecting that the valuation of the IPO would be nothing less than $1.5 trillion. The fund raised is supposed to find an investment in the already planned reforms with a vision to shift and lighten the country’s economic dependency on oil. He also said that as in a long-term and in future it could be seen that the oil demands are diminishing as more alternative fuels are being researched upon this IPO is a strategic step towards ensuring the economic security of the country. While the IPO according to Yilmaz will provide more transparency, as there would be independent audits as well.
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Though the expected IPO has been delayed clearing the air Saudi Oil minister Khalid Al-Falih, told while addressing at the World Economic Forum in Davos Switzerland that the much awaited IPO will take place at a right time. Further, he added that he hoped that the year 2018 is the right time but explained that the market needs to be ready when asked about the delay in the IPO.
