JEDDAH: Deputy Crown Prince Mohammed bin Salman announced on Monday that Saudi Arabia plans to sell less than 5 percent of its state oil company Saudi Aramco through an initial public offering (IPO).

While announcing “Saudi Vision 2030,” he said Aramco, the world’s biggest energy company, would be valued at more than $2 trillion and that he wanted it to be transformed into a holding company with an elected board.

Executives at Saudi Aramco said the economic reform plan announced by the deputy crown prince would fuel growth by boosting existing company initiatives and attracting new capital.

Chief Executive Amin Nasser said in comments posted on the firm’s official Twitter account that the plan will be a “major boost” to initiatives such as IKTVA and renewable energy program.

The Kingdom’s downstream expansion can drive SME growth focused on high-value manufacturing.

The IPO will attract new capital to diversify the Kingdom’s economy and increase global confidence in the company, Chairman Khalid Al-Falih said in separate comments posted on Aramco’s Twitter feed.

He said: “Vision is clear, path is set, and prize is great. Everyone in KSA must play a part.”

The Saudi stock market (Tadawul) reacted positively to the Vision 2030 plan on Monday.

The Tadawul index fell early in the morning but recovered after the announcement and jumped 2.53 percent to 6,868.09 points.

John Sfakianakis, director of economics research at the Gulf Research Center, told Arab News:

“The Saudi Aramco IPO will unleash an era of unprecedented change in the depth of the local stock market but also the level of transparency and governance of the corporate world.”

He said the IPO marks an important milestone also for the uses of the proceeds of the public offering over time via the Public Investment Fund.

Saudi Aramco produces more than 10 million barrels per day, three times as much as the world’s largest listed oil company, ExxonMobil, while its reserves are more than 10 times bigger.

“We plan to sell less than five percent of Saudi Aramco; its size is very big. It is estimated at between $2 trillion and $2.5 trillion,” the deputy crown prince told Al-Arabiya news channel. The Aramco shares would be listed on the Saudi stock exchange (Tadawul) and on an international exchange, possibly in the United States.

He said the Saudi Aramco IPO will boost the size of the Saudi capital market, already the largest in the Arab world.

A regional analyst, who requested anonymity, said: “Redefining the role of the state through gradual monetization of key assets is part of the transition to a more diverse economy and stronger companies.”

Subsidiaries of Aramco would also be sold by IPO as part of a privatization drive and to bring more transparency to the oil giant, the deputy crown prince said.

“If one percent of Aramco is offered to the market it will be the biggest IPO on earth,” he said.