Saudi Approves IPO of Aramco, World's Most Profitable Company

News Network
November 3, 2019

Dhahran, Nov 3: Saudi Aramco said Sunday it will list on the Riyadh stock exchange in what could be the world's largest IPO, underpinning Crown Prince Mohammed bin Salman's ambitions to overhaul the kingdom's oil-reliant economy.

After years of delays, Saudi Aramco finally fired the starting gun on the stock market debut, saying it was a "significant milestone" in the history of the energy giant which pumps 10 per cent of the world's oil.

With analysts saying that Aramco could be valued at up to $1.7 trillion, the initial public offering (IPO) could be the world's biggest, depending on how much of the company it decides to sell.

"Today marks a significant milestone in the history of the company and important progress towards delivering Saudi Vision 2030, the kingdom's blueprint for sustained economic diversification and growth," Aramco chairman Yasir al-Rumayyan said.

"Since its formation, Saudi Aramco has become critical to global energy supply," he said in a statement.

The final offer price and the number of shares to be sold "will be determined at the end of the book-building period", said the firm, which is headquartered in the eastern city of Dhahran.

Aramco had initially been expected to sell a total of five per cent on two exchanges, with a first listing of two per cent on the Tadawul Saudi bourse followed by a three per cent listing on an overseas exchange.

The company made no mention Sunday of a foreign listing but it did say that the Riyadh offering was open to institutional investors as well as Saudi individuals, foreigners resident in the kingdom and other Gulf citizens.

The world's most profitable company also released its results for the nine months to September, saying net profits came in at $68 billion. Aramco only began releasing interim financial results recently.

Its 2018 net profit of $111.1 billion is higher than the profits of Apple, Google and Exxon Mobil combined.

'Integral Component'

The listing forms the linchpin of Prince Mohammed's ambitious plans to overhaul the oil-reliant economy, with tens of billions of dollars needed to fund megaprojects and new industries.

First suggested by the kingdom's de facto ruler in 2016, the IPO was delayed several times reportedly due to his dissatisfaction with the valuation of the firm, which fell short of the hoped for $2 trillion.

Last week, Energy Intelligence cited sources as saying they expect the Saudis to settle on a valuation of $1.6 trillion to $1.7 trillion for the firm.

If confirmed, that would imply the kingdom is ready to accept a compromise of less than the $2 trillion that Prince Mohammed has long insisted the state oil giant is worth.

It remains to be seen whether Saudi authorities are able to find "a compromise between the crown prince's stated preference and market realities in their valuation of Aramco," said Kristian Ulrichsen, a fellow at Rice University's Baker Institute in the United States.

"As the process has been delayed repeatedly and built up as such an integral component of the crown prince's plan to transform Saudi Arabia, international investors will pay very close attention to how Aramco performs on the domestic exchange," Mr Ulrichsen told news agency AFP.

Aramco, which pumps around 10 per cent of the world's oil, is the most profitable company globally and is seen as the kingdom's crown jewel and the backbone of its economic and social stability.

Saudi Arabia has boosted efforts to woo investors to the long-awaited stock market debut by announcing an annual dividend of $75 billion, according to the company's website.

Riyadh is also reportedly seeking to get wealthy Saudi families to buy a stake in the company while some Saudi commentators have sought to promote investment in the stock as a patriotic duty.

However, Aramco executives have encountered scepticism among institutional investors in London and New York on questions about the firm's transparency, governance practices and targeted valuation, sources have told AFP.

"An important function of the domestic IPO is to project confidence in the company towards the international market, but doing it domestically encounters no meaningful obstacle, comparable to doing an international listing," said Cinzia Bianco, Gulf research fellow at the European Council on Foreign Relations.

"It allows Prince Mohammed to show he keeps his promises and gets things done, another step to reassure international investors that the IPO will happen after all," Bianco said.

Saudi Arabia's market regulator approved on Sunday Saudi Aramco's application to list on the domestic stock market as the kingdom seeks to diversify and create the world's most valuable listed company.

The statement did not give a timeframe or say how much Aramco would sell, but sources have told news agency Reuters the oil company could sell 1-2 per cent of its shares on the local bourse, raising as much $20 billion-$40 billion.

Confirmation of the share sale in Saudi Arabian Oil Co, or Aramco, as the oil giant is usually known, comes about seven weeks after crippling attacks on its oil facilities, underlining Saudi Arabia's determination to push on with the listing regardless.

The IPO of the world's most profitable company is designed to turbo charge Crown Prince Mohammed bin Salman's economic reform agenda by raising billions to diversify the kingdom, whose dependency on oil was highlighted by the production impact of the September 14 attacks.

The Capital Market Authority said its board "has issued its resolution approving the Saudi Arabian Oil Company (Saudi Aramco) ... application for the registration and offering of part of its shares."

CMA said the approval would remain valid for six months.

The listing announcement had been expected on October 20 but was delayed after advisers said they needed more time to lock in cornerstone investors, three sources told Reuters.

To help get the deal done, Saudi Arabia is relying on easy credit for retail investors and hefty contributions from rich locals.

Prince Mohammed gave the green light on Friday for the IPO to go ahead, Reuters reported, citing sources.

Although Crown Prince Mohammed put a $2-trillion valuation on the company in early 2016, bankers and company insiders say Aramco's value is closer to $1.5 trillion.

A growing movement to fight climate change and embrace new "green" technologies have put some fund managers, particularly in Europe and the United States, off the oil and gas sector.

At a valuation of $1.5 trillion, Aramco would still be worth at least 50 per cent more than the world's most valuable companies, Microsoft and Apple, which each have a market capitalisation of about $1 trillion.

But a 1 per cent sale would 'only' raise around $15 billion for Saudi coffers, less than the $25 billion generated by Chinese e-commerce giant Alibaba in its record-breaking IPO in 2014.

It would rank Aramco as the 11th biggest IPO of all time, Refinitiv data show.

A sale of 2 per cent of Aramco shares at a $1.5-trillion valuation would make it the biggest IPO of all time, beating Alibaba's.

The prospect of the world's largest oil company selling a piece of itself has had Wall Street on tenterhooks since Crown Prince Mohammed flagged it three years ago.

Initial hopes for a blockbuster international listing of about 5 per cent were dashed when the share sale was halted last year amid debate over where to list Aramco overseas.

Aramco said the IPO timetable was delayed because it began a process to acquire a 70 per cent stake in petrochemicals maker Saudi Basic Industries Corp.

IPO preparations were revived over the summer after Aramco attracted huge interest in its first international bond sale, seen as a pre-IPO relationship-building exercise with investors.

The bond sale forced the secretive company to reveal its finances for the first time, including net income of $111 billion, over a third bigger than the combined net income of the five super majors Exxon Mobil, Royal Dutch/Shell, BP, Chevron and Total.

Oil majors have been raising payouts to shareholders to counter rising pressure from climate activism.

Aramco has said it will pay a base dividend of $75 billion, which at a valuation of $1.5 trillion would mean a dividend yield of 5 per cent, below those offered by competitors such as Exxon Mobil Corp and Royal Dutch Shell.

Shell's dividend yield is over 6 per cent and Exxon's over 5 per cent, according to Refinitiv data.

Adverse Impact

The September attacks on Aramco's largest oil plant, which shut off about 5 per cent of global supply, raised questions about the vulnerability of Aramco's oil fields, plants and exports amid deepening regional tensions.

In its April bond prospectus, Aramco noted that any disruption to its processing facilities could harm its business.

The potential threat to the company's valuation presents a challenge for Yasser al-Rumayyan, head of the kingdom's sovereign wealth fund, who became Aramco chairman in September.

Al-Rumayyan replaced former energy minister Khalid al-Falih in a move to separate Aramco from the ministry ahead of an IPO.

Aramco hired nine banks as joint global coordinators to lead the IPO, including JPMorgan, Morgan Stanley and Saudi Arabia's National Commercial Bank. It added a number of banks as book-runners.

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News Network
February 28,2020

Riyadh, Feb 28: Saudi Arabia on Thursday (Feb 27) suspended visas for visits to Islam's holiest sites for the "umrah" pilgrimage, an unprecedented move triggered by coronavirus fears that raises questions over the annual hajj.

The kingdom, which hosts millions of pilgrims every year in the cities of Mecca and Medina, also suspended visas for tourists from countries with reported infections as fears of a pandemic deepen.

Saudi Arabia, which so far has reported no cases of the virus but has expressed alarm over its spread in neighbouring countries, said the suspensions were temporary. It provided no timeframe for when they will be lifted.

"The kingdom's government has decided to take the following precautions: suspending entry to the kingdom for the purpose of umrah and visit to the Prophet's mosque temporarily," the foreign ministry said in a statement.

"Suspending entry into the kingdom with tourist visas for those coming from countries, in which the spread of the new coronavirus (COVID-19) is a danger."

The move comes as Gulf countries implement a raft of measures, including flight suspensions and school closures, to curb the spread of the disease from people returning from pilgrimages to Iran.

Even as the number of fresh coronavirus cases declines at the epicentre of the disease in China, there has been a sudden increase across the Middle East.

Since its outbreak, the United Arab Emirates has reported 13 coronavirus cases, Kuwait has recorded 43, Bahrain has 33 and Oman is at four cases.

Iran has emerged as a major hotspot in the region, with 19 fatalities from 139 infections - the highest death toll outside China, where COVID-19 originated.

While no cases have been reported in Saudi Arabia, one citizen is reported to be infected in Kuwait along with four Saudi women in Bahrain - all of whom had returned from Iran.

'UNPRECEDENTED' MOVE

The umrah, which refers to the Islamic pilgrimage to Mecca that can be undertaken at any time of year, attracts millions of devout Muslims from all over the globe each year.

There was no clarity over how the move would affect the annual hajj pilgrimage due to start in late July.

Some 2.5 million faithful travelled to Saudi Arabia from across the world to take part in last year's hajj - one of the five pillars of Islam.

The event is a key rite of passage for Muslims and a massive logistical challenge for Saudi authorities, with colossal crowds cramming into relatively small holy sites.

"This move by Saudi Arabia is unprecedented," Ghanem Nuseibeh, founder of London-based risk consultancy Cornerstone Global Associates, told news agency.

"The concern for Saudi authorities would be Ramadan, which starts at the end of April, and hajj afterwards, should the coronavirus become a pandemic."

The holy fasting month of Ramadan is considered a favourable period by Muslim pilgrims to perform the umrah.

Saudi Arabia's custodianship of Mecca and Medina - Islam's two holiest sites - is seen as the kingdom's most powerful source of political legitimacy.

But a series of deadly disasters over the years has prompted criticism of the Sunni kingdom's management of the pilgrimage.

In September 2015, a stampede killed up to 2,300 worshippers - including hundreds of Iranians - in the worst disaster ever to strike the pilgrimage.

The pilgrimage forms a crucial source of revenue for the government, which hopes to welcome 30 million pilgrims annually to the kingdom by 2030.

De facto ruler Crown Prince Mohammed bin Salman's Vision 2030 reform plan seeks to shift the economy of Saudi Arabia - the world's top crude exporter - away from oil dependency towards other sources of revenue, including religious tourism.

Comments

Whether this virus is also created by Allah the powerful? If yes then Muslims need not fear, they should continue to go the Mecca, on the Non-muslims should fear because allah hates them. &

 

And if the Virus not created by Allah, then Who created it?  Is there anyone else other than Allah?

 

You Fool Go-vind...there is no logic in your statement.

will you touch burning fire for 2 min if you are fearless...foolish right

 

GOD is not magic...its logical

 

God never helped any Human beigh with magic to conver to his religion,

he would have done then all will be worshipping him alone..

 

this is test for all human being

 

he created all human beign and he loves every human being but he loves only those who good to another human.

 

screem how ever you want..but muslim population will increase 100%.

please check your health before cursing other.

 

So-called powerfull GOD saved all human beign when they sincierly prayed also you.

 

the more you hate ISLAM the more it become powerful.

 

HINUD is not religion but it is geographical name

RAM is not god but he is king of ayodya same human beign

Phophet Mohammed Pbuh is not GOD but he is messanger of GOD

Veda says na thasya parathima asti- there is no image of GOD but you make some photo and worship.

the biggest sin in front of GOD which will never be forgiven is  worshipping Idol.

God is one not multi...if god is mutli then there is no meaning in justics

 

Love human being automatically God loves you

 

 

Govind
 - 
Friday, 6 Mar 2020

Fools.. Why they fear virus. If somebody ask them, they say we have fear only on Allah. They should go there.. they should be infected and population should decease. Let their so-called powerful god save them

Logical Indian
 - 
Friday, 6 Mar 2020

Muslims fear only Allah and no body else. then why this fear for the virus. They should trust allah fully and allow pilgirms. "Allah o akbar"

Abdul Rahman
 - 
Friday, 28 Feb 2020

Mecca to b spelled Makkah.

Makkah is the correct spelling

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KT
May 18,2020

May 18: As the UAE authorities have asked all residents to avoid gatherings, it is clear that - for the first time - it's going to be a #StayHome Eid. But experts say that although it will be different, the celebration will be just as meaningful.

It is important to remember that the Eid prayer can be performed at home either individually or with family members under the sane roof, said Dr Mohammed Eyada Ayoub Alkobaisi, a Grand Mufti with the Islamic Affairs and Charitable Activities Department in Dubai.

Dr Alkobaisi said this prayer is a highly recommended Sunnah or practice urged by the Prophet Muhammad (Peace be upon him).

"Eid Prayer must be performed openly, unless we are prevented for an acceptable reason, such as fear for self, wellbeing, property, etc." Under the current circumstances, prayers can be offered from home, he said.

But what the faithful will likely miss is listening to the khutbah or the sermon of Eid with a crowd. The sight of people pouring out into the streets and coming together for prayer and worship would not be unfolding this time.

Dr Sheikh Mohamed Ashmawy, an Islamic researcher, said that in this time of Covid, doing away with several Eid traditions would be necessary for everyone's safety.

"The ban is is line with the ongoing preventive measures to curb the spread of Covid-19," he said.

However, it doesn't mean people can't celebrate and exchange heartfelt greetings, he added.

"We can greet each other remotely on the phone or via social media networks."

Islamic researcher Sheikh Mohamed Wasfi said audio-visual smart apps have made communication much easier, even bringing people closer than before.

"Of course, families and friends wish to hug, shake hands and see each other personally, but this will be a big risk these days," he said.

Sheikh Asadullah Del Mohamed, an imam, reminded that banquets, parties and visits are discouraged to avoid crowds and gathering.

Recently, 30 people from two families tested positive for the virus after breaking social distancing rules and holding a gathering.

Faithful's sentiments

Ibrahim Abdelkader, an Egyptian auditor, said that while it would be sad to spend Eid Al Fitr at home, he understood that it is for everyone's safety.

"Better to stay home than be sorry," said Ahmad Jamil, a Syrian resident.

Rashid Saeed, an Emirati national, said people are advised to just check on each other by phone or video and voice call apps.

"While Eid prayers is banned in congregation, it's not acceptable at all for some people to carelessly gather and exchange visits," he said.

Abdullah Al Saleh, an Emirati national, said he and all his relatives used to gather for breakfast after the Eid prayer - but this time, they are ready to do it in their own homes.

Mohamed Ibrahim, another Emirati, said he would surely miss seeing his kids happily prancing around with their new clothes and enjoying the outdoors like every year.

"But, I agree as it is for their health, safety and wellbeing," he said.

THINGS TO REMEMBER IN CELEBRATING EID THIS YEAR

>Perform the Eid prayer at home, individually or with family members living with you

>Exchange greetings with loved ones and friends via phone calls or online

>No hugs

>No handshakes

>No gatherings

>No visits to other homes

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News Network
January 6,2020

Dubai/Washington, Jan 6: Tens of thousands of Iranians thronged the streets of Tehran on Monday for the funeral of Quds Force commander Qassim Suleimani who was killed in a US air strike last week and his daughter said his death would bring a "dark day" for the United States.

"Crazy Trump, don't think that everything is over with my father's martyrdom," Zeinab Suleimani said in her address broadcast on state television after US President Donald Trump ordered Friday's strike that killed the top Iranian general.

Iran has promised to avenge the killing of Qassim Suleimani, the architect of Iran's drive to extend its influence across the region and a national hero among many Iranians, even many of those who did not consider themselves devoted supporters of the Islamic Republic's clerical rulers.

The scale of the crowds in Tehran shown on television mirrored the masses that gathered in 1989 for the funeral of the founder of the Islamic Republic, Ayatollah Ruhollah Khomeini.

In response to Iran's warnings, Trump has threatened to hit 52 Iranian sites, including cultural targets, if Tehran attacks Americans or US assets, deepening a crisis that has heightened fears of a major Middle East conflagration.

The coffins of the Iranian general and Iraqi militia leader Abu Mahdi al-Muhandis, who was also killed in Friday's attack on Baghdad airport, were passed across the heads of mourners massed in central Tehran, many of them chanting "Death to America".

One of the Islamic Republic's major regional goals, namely to drive US forces out of neighbouring Iraq, came a step closer on Sunday when the Iraqi parliament backed a recommendation by the prime minister for all foreign troops to be ordered out.

"Despite the internal and external difficulties that we might face, it remains best for Iraq on principle and practically," said Iraqi caretaker Prime Minister Adel Abdul Mahdi, who resigned in November amid anti-government protests.

Iraq's rival Shi'ite leaders, including ones opposed to Iranian influence, have united since Friday's attack in calling for the expulsion of US troops.

Esmail Qaani, the new head of the Quds Force, the Revolutionary Guards' unit in charge of activities abroad, said Iran would continue Suleimani's path and said "the only compensation for us would be to remove America from the region."

ALLIES AT FUNERAL

Prayers at Suleimani's funeral in Tehran, which will later move to his southern home city of Kerman, were led by Iran's Supreme Leader Ayatollah Ali Khamenei. Suleimani was widely seen as the second most powerful figure in Iran behind Khamenei.

The funeral was attended by some of Iran's allies in the region, including Ismail Haniyeh, the leader of Palestinian group Hamas who said: "I declare that the martyred commander Suleimani is a martyr of Jerusalem."

Adding to tensions, Iran said it was taking another step back from commitments under a 2015 nuclear deal with six major powers, a pact from which the United States withdrew in 2018.

Washington has since imposed tough sanctions on Iran, describing its policy as "maximum pressure" and saying it wanted to drive down Iranian oil exports - the main source of government revenues - to zero.

Talking to reporters aboard Air Force One on the way to Washington from Florida on Sunday, Trump stood by his remarks to include cultural sites on his list of potential targets, despite drawing criticism from US politicians.

"They're allowed to kill our people. They're allowed to torture and maim our people. They're allowed to use roadside bombs and blow up our people. And we're not allowed to touch their cultural sites? It doesn't work that way," Trump said.

Democratic critics of the Republican president have said Trump was reckless in authorizing the strike, and some said his comments about targeting cultural sites amounted to threats to commit war crimes. Many asked why Soleimani, long seen as a threat by US authorities, had to be killed now.

Republicans in the US Congress have generally backed Trump's move.

Trump also threatened sanctions against Iraq and said that if US troops were required to leave the country, Iraq's government would have to pay Washington for the cost of a "very extraordinarily expensive" air base there.

He said if Iraq asked US forces to leave on an unfriendly basis, "we will charge them sanctions like they've never seen before ever. It'll make Iranian sanctions look somewhat tame."

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