Saudi Aramco sets IPO share price between 30-32 riyals for ‘sale of the century’

Saudi Aramco also intends to buy $1 billion worth of shares for employees under a plan to incentivize executives and staff members. (AFP)
Updated 18 November 2019

Saudi Aramco sets IPO share price between 30-32 riyals for ‘sale of the century’

  • Final pricing for the Aramco shares would be announced on Dec. 5
  • The IPO could be worth least $24 billion, and values the state-owned oil giant at up to $1.71 trillion

DUBAI: The Saudi Arabian “sale of the century” — the initial public offering of shares in Saudi Aramco — moved into top gear with the announcement of pricing details and official valuation of the most profitable company in the world.

The Kingdom will sell a total of 3 billion shares in Aramco — around 1.5 percent of the total — at a valuation between SR30 ($8) and SR32 per shares, giving a total valuation of between $1.6 trillion and $1.7 trillion, making it the most valuable company in history.

Investment professionals welcomed the valuation, which was lower than the highest estimates of Aramco’s worth, as a “compromise” between the Kingdom and the financial world.

Tarek Fadhallah, CEO of Nomura Asset Management in the Middle East, said: “My first impression is that the price is a sensible compromise and that it will sell the IPO.”

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Setting the price range and the number of shares to be sold starts the “bookbuilidng” process during which Aramco and its advisers will consult with potential investors and await bids from the institutions and private investors to decide at what level the shares will finally be sold.

A final pricing decision will come on Dec. 5, and trading is expected to start on the Tadawul shortly after.

Private investors — Saudi nationals, resident expatriates and Gulf nationals — will have to decide how many shares they want at the SR32 level, and wait to see if their application will be met in full.

If the final price is set lower than the top of the range, investors can have their money refunded or take up extra shares to an equivalent value.Aramco has decided not to market the shares via “roadshows” in certain markets because of a relaxation of Riyadh market rules that will allows foreign investors to buy shares on Tadawul.

The value of the stock on offer in the IPO will be between $24 billion and $25.6 billion — beating the existing record for a share issue set by Alibaba on the New York Stock exchange in 2014.

The proceeds from the sale — earmarked for investment into the diversification of the Saudi economy under the Vision 2030 reform plans — could go even higher depending on demand, with an extra chunk of shares allocated to advisers as part of the price stabilization mechanism.

Aramco is also committed to buying $1 billion in shares for its employees in an incentive scheme.


STC postpones its acquisition of Vodafone Egypt for second time

Updated 13 July 2020

STC postpones its acquisition of Vodafone Egypt for second time

  • Kingdom’s largest telecom company says it will need an additional two months to complete the deal

CAIRO: The Saudi Telecom Company (STC), the Kingdom’s largest telecom company, said that it will need an additional two months to complete a deal to purchase a 55 percent stake in Vodafone Egypt.

In January, STC was in agreement to buy the stake for $2.4 billion. In April, it extended the process for 90 days due to logistical challenges stemming from the spread of COVD-19. The company said in a statement that it would extend the period again to September for the same reason.

The Public Investment Fund, the Saudi sovereign wealth fund, owns a majority stake in STC. The ownership of Vodafone Egypt is divided between 55 percent for Vodafone International, which is the target percentage of the Saudi purchase offer, 44.8 percent for Telecom Egypt, and the remaining 0.2 percent for small shareholders.

Telecom Egypt is awaiting the results of Vodafone’s evaluation of the final share price to announce its position on the deal. A Telecom Egypt official stated that the company is still awaiting STC’s position regarding the purchase of the share. If the deal is not completed, it may be presented with its rights to acquire Vodafone’s share, which would allow it to take over 99.8 percent of the company’s shares, leaving 0.2 percent for small investors.

Ashraf El-Wardany, an Egyptian communications expert, pointed out the importance of waiting until the procedures between STC and the Vodafone Group are complete. The results will determine the next steps by Telecom Egypt.

El-Wardany said that the Saudi operator must, after completing the relevant studies, submit a final binding offer at the share price and any conditions for purchase. If approved by Vodafone, it must submit the offer with the same conditions and price to Telecom Egypt, provided that the latter responds within a maximum period of 45 days to determine its position regarding the use of the right of pre-emption and the purchase, or lack thereof, of Vodafone’s share.

According to El-Wardany, there are other possible scenarios. Vodafone International may not be convinced of the offer or the conditions presented by the Saudi side and the sale may be withdrawn, or the Vodafone group may be ready to sell and has prepared another buyer for its stake in Egypt in the event of rejecting the Saudi offer. It may also it back away from the deal and continue to operate in Egypt for a few more years.

El-Wardany said that if Telecom Egypt decides not to use the right of pre-emption to acquire the remaining Vodafone shares for any reason, it will continue with its 44.8 percent stake.
It may also resort to selling all of its shares or part of it to the Saudi side or to any company that wants to acquire its stake.

“This raises the question of whether STC can acquire all of Vodafone’s shares,” El-Wardany said, adding that the coming months “will make the answer clear.”