State-owned oil giant Saudi Aramco has approached Abu Dhabi Investment Authority (ADIA), Singapore’s GIC and other sovereign wealth funds to invest in its upcoming initial public offering (IPO) as the company strives to achieve a $2-trillion valuation.
Reuters is reporting that bankers preparing Saudi Aramco to go public are holding talks with sovereign wealth funds in Asia and the Middle East in an effort to convince them to invest in the upcoming IPO, which the Saudi royal family wants to be the biggest public debut ever for a company – topping Alibaba’s sale of $25 billion worth of shares.
To achieve the $2-trillion valuation, Aramco needs the initial listing of a 1% stake on the Saudi market to raise at least $20 billion. But bankers and company insiders have described the valuation as ambitious, due to a weak outlook for oil prices as deepening climate change activism could dampen investor interest, particularly in the Western world.
A further risk to the $2 trillion target was raised by the September 14 strikes that knocked out more than half the production of the world’s top oil exporting nation. Saudi Arabia has been assuring investors it can quickly restore output.
Reuters reported that the Kingdom has been busy looking for a more sympathetic investor base in the Middle East and Asia, while also seeking support from the wealthiest Saudi families. Preparations for the IPO have gone through various stages since it was first announced in 2016. An exact date for the IPO has not been announced.
