— This is the script of CNBC's news report for China's CCTV on November 4, 2019, Monday.
Market believes this is just the first stage for Saudi Aramco's IPO, next, Saudi Aramco will seek to go IPO in international market, exchanges in NYK, London, HK and Tokyo are competing on that now, Aramco's total public offering is expected to eventually reach 5%.
More details about the Saudi listing, including the number and price of the offering, the size of the offering and the exact timing of the offering, will have to wait until the prospectus is released on Nov. 9. But Reuters, citing people familiar with the matter, said Aramco would list a stake of about 1 to 2 percent in the country, financing will range from $20bn to $40bn. When it planned to go IPO in 2016, Saudi Arabia's crown prince has said he wants the company valued at $2 trillion, But bankers and company insiders believe the company should be valued at closer to $1.5 trillion. Even at the lower valuation, Aramco is still 50 percent more valuable than today's most valuable companies, such as Microsoft and Apple. But if Aramco issues fewer shares at a lower valuation, it may not be able to surpass Alibaba in the record for the largest IPO. Alibaba raised $25 billion when it went public in 2014.
We know that Aramco's listing is an important part of the crown prince's vision 2030 plan to reduce the kingdom's dependence on crude oil and further diversify its economy.
But Aramaco's listing has been delayed several times in the past few years, of course there are different factors inside and outside the company, but fundamentally there are some differences in valuation. Aramco needs to find a good time to go public and give the market full confidence. Many fund managers in Europe and the us are trying to stay away from investing on oil and gas because of the movement of global climate change and green technology. Supporting the sky-high valuations needs at least two positive factors: higher oil prices to support it, and the company's stable and long-term profitability. Currently, aramco is undoubtedly the most profitable company in the world, and the company's recent business data are also remarkable. Aramco has also demonstrated its ability to quickly restore production capacity in the wake of the earlier attacks. Still, much remains unknown about the future direction of oil prices.
So how much confidence does the market have in Aramco, and whether it can set more records. We will see when it go listing.