Even Banks Have No Idea What Aramco Is Worth

In what could be just days ahead of the most-anticipated initial public offering ever, investment banks continue to give enormous ranges in their low and high estimates of how much Saudi Arabia’s oil giant Aramco is really worth.

Morgan Stanley is the latest bank to have put a massive US$1 trillion gap between the low and high estimates of Saudi Aramco, Bloomberg reported on Wednesday, citing a presentation it has seen.

Bankers at Morgan Stanley have calculated that in the most bearish case, Aramco is worth US$1.06 trillion, while the highest estimate in the most bullish scenario is US$2 trillion. Morgan Stanley’s base case valuation stands at US$1.52 trillion—US$500 billion lower than what Crown Prince Mohammed bin Salman would have liked.

Nearly all banks have huge gaps in their low-end and high-end valuations. The valuations from 16 banks that have come up with estimates range from as low as US$1.1 trillion to as high as US$2.5 trillion, Bloomberg says, quoting people who have reviewed all estimates.

The midpoint of the banks’ valuation is US$1.75 trillion. This could be enough to get the Crown Prince on board, despite the speculation that MbS has insisted on the US$2-trillion valuation he first mentioned when he announced plans for Aramco to go public more than three years ago.

The Saudis could be willing to compromise on the valuation and banks will now look to hit a valuation of US$1.6 trillion-US$1.8 trillion, Bloomberg reported earlier this month, citing people briefed on the issue.

After years of delays, the world’s largest oil producer and the world’s most profitable company in any sector announced in early November its intention to proceed with an IPO on the Saudi stock market. But Aramco still needs to clear one very important hurdle—its valuation.

Aramco’s prospectus of 658 pages published this weekend was very scarce on details, too. The number of shares, the price and date of the listing remain shrouded in mystery, even after Saudi Aramco released its long-awaited IPO prospectus.

By Tsvetana Paraskova for Oilprice.com