The ‘Goldilocks’ level in the Aramco IPO — $8.75 a share

Saudi Aramco has published more details about its planned stock market flotation. (File/Reuters)
Updated 12 November 2019

The ‘Goldilocks’ level in the Aramco IPO — $8.75 a share

  • There are currently 200 bn shares in existence in Saudi Aramco
  • 0.5 percent of the shares will be targeted at private shareholders

DUBAI: Enough clues are emerging from the Saudi Aramco prospectus for the forthcoming initial public offering (IPO) to make an informed guess about what the price per share will be when the stock is finally priced on Dec. 4 ahead of Tadawul trading a few days later.
I must stress that I am not the recipient of any inside information in this respect, merely an observer of stock market dealings and IPOs going back to the 1980s — long before they became known as IPOs and were usually called “floats” or listings.” But my logic goes like this.
We know that there are 200 billion shares in Saudi Aramco in existence — that’s in the prospectus — and we know that about 0.5 percent of them will be targeted at private shareholders — Saudi nationals, resident expats who bank at the right place and GCC citizens — in the IPO.
So that means 1 billion shares, give or take a few maybe, will be offered to investors in the non-institutional tranche of the offering.
Of course, we don’t know yet what the total market capitalization of Aramco will be once the book-building process is completed. That will depend largely on demand among the big global institutions.
But the range of values produced by the banks advising on the IPO is huge — from a low of $1.2 trillion to a high of $2.3 trillion. It is unlikely the IPO would go ahead at below $1.5 trillion, and more than $2 trillion just seems exorbitant, even in the Kingdom’s wildest dreams.
So let’s assume a “Goldilocks” mid-way point of $1.75 trillion — not too hot for the international buyers, not too cold for the vendors.
That would equate to a price of $8.75 per share, meaning that the private shareholder tranche would be looking to raise $8.75 billion, or roughly $260 from each man, woman and child in the Kingdom’s population of 33.4 million.
That does not seem too excessive for the IPO of a lifetime.


A Jordan startup delivers eco-friendly alternative to dry cleaning

Updated 05 December 2019

A Jordan startup delivers eco-friendly alternative to dry cleaning

  • Products used by WashyWash are non-carcinogenic and environmentally neutral
  • Amman-based laundry service aims to relocate to a larger facility in mid-2020

AMMAN: A persistent sinus problem prompted a Jordanian entrepreneur to launch an eco-friendly dry-cleaning service that could help end the widespread use of a dangerous chemical.

“Dry cleaning” is somewhat of a misnomer because it is not really dry. It is true that no water is involved in the process, but the main cleaning agent is perchloroethylene (PERC), a chemical that experts consider likely to cause cancer, as well as brain and nervous system damage.

Kamel Almani, 33, knew little of these dangers when he began suffering from sinus irritation while working as regional sales director at Eon Aligner, a medical equipment startup he co-founded.

The problem would disappear when he went on vacation, so he assumed it was stress related.

However, when Mazen Darwish, a chemical engineer, revealed he wanted to start an eco-laundry and warned about toxic chemicals used in conventional dry cleaning, Almani had an epiphany.

“He began to tell me how PERC affects the respiratory system, and I suddenly realized that it was the suits I wore for work — and which I would get dry cleaned — that were the cause of my sinus problems,” said Almani, co-founder of Amman-based WashyWash.

“That was the eureka moment. We immediately wanted to launch the business.”

WashyWash began operations in early 2018 with five staff, including the three co-founders: Almani, Darwish and Kayed Qunibi. The business now has 19 employees and became cash flow-positive in July this year.

“We’re very happy to achieve that in under two years,” Almani said.

The service uses EcoClean products that are certified as toxin-free, are biodegradable and cause no air, water or soil pollution.

Customers place orders through an app built in-house by the company’s technology team.

WashyWash collects customers’ dirty clothes, and cleans, irons and returns them. Services range from the standard wash-and-fold to specialized dry cleaning for garments and cleaning of carpets, curtains, duvets and leather goods.

“For wet cleaning, we use environmentally friendly detergents that are biodegradable, so the wastewater doesn’t contain any toxic chemicals,” Almani said.

For dry cleaning, WashyWash uses a modified hydrocarbon manufactured by Germany’s Seitz, whose product is non-carcinogenic and environmentally neutral.

A specialized company collects the waste and disposes of it safely.

The company has big ambitions, planning to expand its domestic operations and go international. Its Amman site can process about 1,000 items daily, but WashyWash will relocate to larger premises in mid-2020, which should treble its capacity.

“We’ve built a front-end app, a back-end system and a driver app along with a full facility management system. We plan to franchise that and have received interest from many countries,” Almani said.

“People visiting Amman used our service, loved it, and wanted an opportunity to launch in their countries.”

WashyWash has received financial backing from angel investors and is targeting major European cities initially.

“An eco-friendly, on-demand dry-cleaning app isn’t available worldwide, so good markets might be London, Paris or Frankfurt,” Almani said.

 

• The Middle East Exchange is one of the Mohammed bin Rashid Al-Maktoum Global Initiatives that was launched to reflect the vision of the UAE prime minister and ruler of Dubai in the field of humanitarian
and global development, to explore the possibility of changing the status of the Arab region. The initiative offers the press a series of articles on issues affecting Arab societies.