Listing of the Shares will be on the Main Market of Tadawul
The Offering is being made available to qualifying Individual Investors and Institutional Investors.
The Offering shall be restricted to the following two groups of investors:
Tranche (A) (Institutional Subscribers): Institutional subscribers comprise the institutional investors eligible to participate in the book-building process as specified in Annex I
Tranche (B) (Individual Investors): Individual investors comprise Saudi Arabian nationals, including any Saudi female divorcee or widow with minor children from a marriage to a non-Saudi person who can subscribe for her own benefit or in the names of her minor children, on the condition that she proves that she is a divorcee or widow and the mother of her minor children, any non-Saudi natural person who is resident in the Kingdom and any GCC national, in each case who has a bank account with one of the Receiving Entities
Why does Tranche B specifically mention Saudi female divorcees? Is the implication that married and single women aren't allowed to purchase shares, or am I misunderstanding?
Corrupt russian oil and gas companies trade at 4x earnings. At that valuation with annual earnings of $90 billion aramco should be valued at more like $360 billion.
Sorry, but that's the penalty you pay for being a corrupt journalist murdering autocrat.
'Saudi “domestic investors could probably provide enough support to achieve that $2tn valuation.” Those domestic investors will probably pay the $2 trillion out of some combination of enthusiasm and, uh, “enthusiasm”...
'Look if WeWork could have ordered banks to lend money to investors to fund share purchases, and if it could have threatened people with arrest and torture if they didn’t buy shares, then I am pretty sure its IPO would have gone well. Aramco more or less can, which means that (1) there is a chunk of pretty inelastic demand at $2 trillion and (2) even if you are a foreign investor who thinks that the $2 trillion number is laughably high, you will be very diplomatic about expressing that in meetings with Aramco officials.'
The difference is that Saudi oil reserves basically cost nothing to extract. Maybe $5 a barrel. You literally poke a hole in the ground and oil bubbles out.
That makes Aramco significantly less risky than your typical oil company. Even if oil goes to $25 a barrel, the company will still be solvent, and even profitable. Mismanagement (like Pemex) is basically impossible under these conditions. It also means less capital reinvestment is necessary, so more dividends for the shareholders.
Less market risk, less operational risk, higher cash yield. All those things drive up the valuation multiple.
From my understanding, the high valuation of Saudi Aramco does not seem to stem from them being the best in to industry for processing oil, but rather, from their access to the richest and cheapest source of oil. This license is their source of making huge profits - i.e. the difference between the cost price versus the market price.
To the best of my understanding, Saudi Aramco has no ownership of the oil fields but merely manages them on behalf of KSA. So is there anything impeding KSA from simply selling oil field access to someone else than Saudi Aramco after the IPO, and in effect, eliminating Saudi Aramco's source of profits?
The original oil well is probably the ultimate example of how the best ideas often sound completely insane. The basic story is that the guy pitched a bunch of VCs in New Haven in the 1850s and got laughed out of the room for saying that he thought the stuff inside whales was buried under a mountain in Pennsylvania.
Maybe they were (bio)chemists at heart? That stuff under a mountain is mineral oil: more useful than edible oils in many ways but it has to go under the frying pan, not in it.
"Bankers say there is enthusiasm among Saudis for the listing, with domestic investors expected to comprise the bulk of the offering. Local banks are expected to lend heavily to Saudis to enable them to buy shares. Wealthy merchant families, many of whom were ensnared in Prince Mohammed’s corruption crackdown in 2017, have been pressed to invest."
I wonder if the decision to float SA now is due to risk from alternative energy sources and, more recently, security risk. Trade the cow in for cash while you still can.
If you want to read a more thorough and vivid version of all the history mentioned, and so much more, I recommend The Prize: The Epic Quest for Oil, Money, and Power by Daniel Yergin. One of the most enjoyable non-fiction books I’ve ever read.
Saudi Arabia is economic time bomb. They want to sell because they need the money.
Saudis have been running budget deficits 4 - 5 percent of the GDP year after year. Deficit might hit 7 percent this year. Saudi Aramco is a profit machine but the population is now over 30 million and the country if full of unemployment and bullshit jobs.
Cutting spending may not be politically possible because it's buying peace. Official unemployment rate is less than 15% but it's estimated that only less than half of working-age Saudis hold jobs or actively seek work. Foreign exchange funds provide buffers but their net foreign assets are gradually eaten away if oil price don't recover.
Probably because in 10-15 years time an oil company won't be able raise any significant amount of money. Major investors have already started divesting from fossil fuels.
If they're smart, the money will be invested in creating the post-oil economy SA will need. They could keep on being an important energy exporter, sunlight is very abundant there after all.
Like with sovereign bond defaulters or countries who have nationalised US owned assets: they would get sued in US courts. US courts would freeze and/or confiscate Saudi assets. Saudi Princes might find yatchs, private planes and super cars start getting impounded wherever lawsuits can be filed.
[+] [-] achow|6 years ago|reply
https://www.saudiaramco.com/-/media/images/investors/aramco-...
If you are wondering about investing..
Offer Highlights:
Listing of the Shares will be on the Main Market of Tadawul
The Offering is being made available to qualifying Individual Investors and Institutional Investors.
The Offering shall be restricted to the following two groups of investors:
Tranche (A) (Institutional Subscribers): Institutional subscribers comprise the institutional investors eligible to participate in the book-building process as specified in Annex I
Tranche (B) (Individual Investors): Individual investors comprise Saudi Arabian nationals, including any Saudi female divorcee or widow with minor children from a marriage to a non-Saudi person who can subscribe for her own benefit or in the names of her minor children, on the condition that she proves that she is a divorcee or widow and the mother of her minor children, any non-Saudi natural person who is resident in the Kingdom and any GCC national, in each case who has a bank account with one of the Receiving Entities
[+] [-] Pyxl101|6 years ago|reply
[+] [-] tuberelay|6 years ago|reply
Corrupt russian oil and gas companies trade at 4x earnings. At that valuation with annual earnings of $90 billion aramco should be valued at more like $360 billion.
Sorry, but that's the penalty you pay for being a corrupt journalist murdering autocrat.
[+] [-] lordgrenville|6 years ago|reply
'Saudi “domestic investors could probably provide enough support to achieve that $2tn valuation.” Those domestic investors will probably pay the $2 trillion out of some combination of enthusiasm and, uh, “enthusiasm”...
'Look if WeWork could have ordered banks to lend money to investors to fund share purchases, and if it could have threatened people with arrest and torture if they didn’t buy shares, then I am pretty sure its IPO would have gone well. Aramco more or less can, which means that (1) there is a chunk of pretty inelastic demand at $2 trillion and (2) even if you are a foreign investor who thinks that the $2 trillion number is laughably high, you will be very diplomatic about expressing that in meetings with Aramco officials.'
https://www.bloomberg.com/opinion/articles/2019-10-28/effici...
[+] [-] dcolkitt|6 years ago|reply
That makes Aramco significantly less risky than your typical oil company. Even if oil goes to $25 a barrel, the company will still be solvent, and even profitable. Mismanagement (like Pemex) is basically impossible under these conditions. It also means less capital reinvestment is necessary, so more dividends for the shareholders.
Less market risk, less operational risk, higher cash yield. All those things drive up the valuation multiple.
[+] [-] publicrootkey|6 years ago|reply
To the best of my understanding, Saudi Aramco has no ownership of the oil fields but merely manages them on behalf of KSA. So is there anything impeding KSA from simply selling oil field access to someone else than Saudi Aramco after the IPO, and in effect, eliminating Saudi Aramco's source of profits?
[+] [-] reallymental|6 years ago|reply
Even if you think that the goose might be getting older and less fertile, it doesn't make sense.
It only makes sense if you know when the goose is gonna run out of eggs. And in this case I'm not sure anyone knows.
[+] [-] Alex3917|6 years ago|reply
[+] [-] tempguy9999|6 years ago|reply
[+] [-] thombat|6 years ago|reply
[+] [-] sacrificedcapon|6 years ago|reply
[deleted]
[+] [-] kqr2|6 years ago|reply
https://www.ft.com/content/19363bfc-dbc0-11e9-8f9b-77216ebe1...
[+] [-] aembleton|6 years ago|reply
"Bankers say there is enthusiasm among Saudis for the listing, with domestic investors expected to comprise the bulk of the offering. Local banks are expected to lend heavily to Saudis to enable them to buy shares. Wealthy merchant families, many of whom were ensnared in Prince Mohammed’s corruption crackdown in 2017, have been pressed to invest."
[+] [-] neonate|6 years ago|reply
[+] [-] droidno9|6 years ago|reply
[+] [-] pimmen|6 years ago|reply
[+] [-] roenxi|6 years ago|reply
The Saudis don't have an industry more strategically important than oil.
[+] [-] nabla9|6 years ago|reply
Saudis have been running budget deficits 4 - 5 percent of the GDP year after year. Deficit might hit 7 percent this year. Saudi Aramco is a profit machine but the population is now over 30 million and the country if full of unemployment and bullshit jobs.
Cutting spending may not be politically possible because it's buying peace. Official unemployment rate is less than 15% but it's estimated that only less than half of working-age Saudis hold jobs or actively seek work. Foreign exchange funds provide buffers but their net foreign assets are gradually eaten away if oil price don't recover.
[+] [-] nickserv|6 years ago|reply
If they're smart, the money will be invested in creating the post-oil economy SA will need. They could keep on being an important energy exporter, sunlight is very abundant there after all.
[+] [-] celticninja|6 years ago|reply
[+] [-] alex_duf|6 years ago|reply
[+] [-] hjek|6 years ago|reply
Beautiful clean oil.
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] tracer4201|6 years ago|reply
[+] [-] steve19|6 years ago|reply