Saudi Arabia’s Aramco announced plans on Sunday to take the company public. Aramco is known as the most profitable business in the world, with a reported net income of $111 billion in 2018. The long-awaited Initial Public Offering (IPO) could be the largest initial stock offering ever. For years, Riyadh has intended to list the company as public, but efforts were deterred by geopolitical incidents and investor reluctance. While the formal announcement is a significant step towards finalizing the listing, salient questions remain unanswered, namely: how many shares will be listed and at what price.
Investors value the company at around $1.5 trillion, which falls short of the $2 trillion valuation Crown Prince Mohammed Bin Salman Al Saud placed on the company when talks regarding the IPO initiated in 2016. Proceeding with the IPO will provide Crown Prince Mohammad Bin Salman Al Saud with the opportunity to diversify the Saudi economy and make it less dependent on oil. The announcement of the IPO is moreover important to Saudis because it finally provides many with the opportunity to have a stake in their well-endowed country’s natural resources. International investors remain more wary, concerned with Saudi Arabia’s history of human rights abuses and extensive use of fossil fuels.
