WORLD’S BIGGEST, WORLD’S GREATEST
Global markets are eagerly anticipating the biggest IPO in history as the government gets set to put a portion of Saudi Aramco to market.
In a bid to revitalize the capital markets, further encourage foreign investors, and diversify the economy away from oil and gas, Saudi Arabia is gearing up for an IPO of Saudi Aramco, the state oil giant.
According to government estimates, Saudi Aramco, which generates over USD1 billion per day, is said to be valued at a whopping USD2 trillion. This value rests primarily on the company's crude oil production of 10.2 million barrels per day (bpd), equal to the entire amount produced in the US per day. It also includes production of 1.5 million bpd of natural gas liquids and more than 10 billion cubic feet per day of natural gas.
Moreover, the giant has rights to the largest recoverable oil reserves in the world at 267 billion barrels. These reserves are also easier and cheaper to extract than in any country, given Aramco's long-term investment in technologies and energy infrastructure. In addition to these rights, the company's assets also include a number of leading refineries and joint ventures with the biggest names in global energy, such as Saudi Aramco Mobile Refinery Company (SAMREF), Saudi Aramco Shell Refining Company (SASREF), and Yanbu Aramco Sinopec Refining Company (YASREF).
According to the Vision 2030 blueprint, a stake of just 5% will be made public. Nonetheless, this will still generate around USD100 billion—far exceeding Alibaba's USD25 billion listing on the NYSE, the biggest IPO to date.
In February 2017, global-powerhouses Morgan Stanley, JPMorgan, and HSBC were named as the underwriters for the offering. Yet, it was Moelis & Company, a boutique investment firm from New York, which stole the headlines for landing its biggest advisory mandate yet for the IPO. The advisors are now in the process of restructuring Aramco internally to make it more attractive, efficient, and transparent for investors.
In terms of timing, the IPO was scheduled to take place in early 2018. Although, as TBY has heard in interviews with key players in the Kingdom's finance and energy sectors, this is likely to be pushed to late 2018, if not early 2019. Saudi's Tadawul will be the natural home of the listing, while it has also been made clear that there will be multiple listings, with New York, London, and Hong Kong each eyeing their place in the history books.
Yet, it is back in the Kingdom where the historical significance of Aramco's offering will be felt most. As outlined by Vision 2030, the ownership of Saudi Aramco will be transferred to the Public Investment Fund (PIF), Saudi Arabia's main investment arm. Already valued at over USD100 billion with key domestic assets through stakes in SABIC and National Commercial Bank, PIF is on course to become the world's biggest fund once Aramco's partial sale materializes.
As an indication of how the USD100 billion proceeds will be channeled, PIF has attracted global attention over the past 12 months through its strategic investments in innovation and advanced technologies. In particular, in May 2017 the fund confirmed its USD45 billion commitment to Softbank's Vision Fund, headed by Japanese tech-visionary Masayoshi Son. The initiative has raised a massive USD93 billion, making it the biggest private equity fund in the world. PIF has likewise pledged multi-billion investments into car-hire firm Uber as well as a joint venture with Dubai's Mohammed Alabbar to create the Middle East's future e-commerce giant, Noon, signaling the Kingdom's long-term, technology-driven objectives.
Perhaps the true benefits of Saudi Aramco's historic offering are best summed up the Crown Prince himself: “IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil."
WORLD’S BIGGEST, WORLD’S GREATEST
TABLE OF CONTENTS
Column
YB Pehin Dato Lim Jock Seng, Minister at the Prime Minister’s Office & Second Minister of Foreign Affairs and Trade, Brunei
TBY talks to YB Pehin Dato Lim Jock Seng, Minister at the Prime Minister's Office & Second Minister of Foreign Affairs and Trade, Brunei, on the sector.
read articleReview
A Crude Awakening
The Kingdom has made renewables a critical aspect of its ambitious Vision 2030 effort to diversify its economy and wean itself from a strictly carbon-based diet, not to mention empower local businesses and individuals to take up the mantle and lead the energy sector into the next generation.
read articleInterview
Abdulaziz AbdulKarim, Vice President of Procurement & Supply Chain Management (PSCM) , Saudi Aramco,
TBY talks to Abdulaziz AbdulKarim, Vice President of Procurement & Supply Chain Management (PSCM) at Saudi Aramco, on the IKTVA program, supporting local content, and looking back over a successful year.
read articleInterview
Ayman Abdullah Alfallaj, CEO, Thiqah
TBY talks to Ayman Abdullah Alfallaj, CEO of Thiqah, on how the private sector can keep pace with the speed of public reforms, delivering a strong and lasting value proposition, and integrating the fruits of privatization into the public sector.
read articleFocus: Technology Investments
Investment Calling
A technological revolution is underway in the Kingdom. Already one of the most tech-savvy nations in the Middle East, the Saudi market has long sought a thriving domestic technology and innovation scene. And with Vision 2030, it is on course to deliver just that.
read articleReview
A Hejaz Unhindered
An ambitious series of road and rail projects from the Jordanian border down to the Indian Ocean are slated to open in part before the end of 2017. They bring the Kingdom that much nearer to its goal of greater non-carbon-based economic integration with the world.
read articleInterview
Sulaiman bin Abdullah Al-Hamdan, Former Minister of Transport and Minister, Civil Service
TBY talks to Sulaiman bin Abdullah Al-Hamdan, Former Minister of Transport and current Minister of Civil Service, on an attractive legislative framework for investment, railway linkages, and port developments.
read articleInterview
Rumaih M. Al-Rumaih, President, Public Transport Authority (PTA
TBY talks to Rumaih M. Al-Rumaih, President of Public Transport Authority (PTA) & Acting President of Saudi Railway Organization, on teaming up with commercially committed partners, making sure the Kingdom's land and sea bridges are of the first order, and providing employment for all the Kingdom's inhabitants.
read articleInterview
Nabeel M. Al-Amudi, President, Saudi Ports Authority, and Minister of Transport
TBY talks to Nabeel M. Al-Amudi, Minister of Transport, and President of Saudi Ports Authority, on optimally restricting concession agreements, resolving bottlenecks in the logistics chain, and privatizing as rapidly as possible.
read articleInterview
Khaled Bin Abdullah Al Hogail, CEO & Managing Director , Saudi Public Transport Company (SAPTCO)
TBY talks to Khaled Bin Abdullah Al Hogail, CEO & Managing Director of the Saudi Public Transport Company (SAPTCO), on the importance of strong and rational regulations, knowledge transfers, and unifying public and private transportation networks.
read articleInterview
Imad El-Zein, CEO, Auto World-Sixt Saudi Arabia
TBY talks to Imad El-Zein, CEO of Auto World-Sixt Saudi Arabia, on growing market share in challenging circumstances, partnering with world-class players to boost its local presence, and combining better services with lower costs.
read articleInterview
Saleh H. Al-Ghamdi, Acting CEO, Saudi Air Navigation Services Company (SANS)
TBY talks to Saleh H. Al-Ghamdi, Acting CEO of Saudi Air Navigation Services Company (SANS), on maximizing safe and effective services, effectively increasing the rate of Saudization, and easing the pathway of women into the workforce.
read articleInterview
Khalil Kutubkhanah, CEO, Jeddah Development and Urban Regeneration Company (JDURC)
TBY talks to Ibrahim Khalil Kutubkhanah, CEO of Jeddah Development and Urban Regeneration Company (JDURC), on Jeddah's unplanned settlements, the company's redevelopment projects, and its partnership model with the private sector.
read articleInterview
Dr. Khalid Bin Mohammed Al Shaibani, Deputy Minister, Planning and Health & Director of the Vision Realization Office
TBY talks to Dr. Khalid Bin Mohammed Al Shaibani, Deputy Minister for Planning and Health & Director of the Vision Realization Office, on reforms within the Ministry of Health, the corporatization of healthcare provision, and transformations in care delivery.
read articleInterview
Mohanad A. Dahlan, CEO, University of Business and Technology (UBT) Company
TBY talks to Mohanad A. Dahlan, CEO of University of Business and Technology (UBT) Company, on the evolution of the company, education investments, and upcoming sectors that will need support from the sector.
read articleFocus: Universities
Broad and Deep
As part of the continuing decentralization of higher education in Saudi Arabia, individual universities are pursuing their own paths to grow their faculties, engage with various international stakeholders, and ultimately move toward a more privatized future.
read articleInterview
Rafique Izhiman, Area General Manager KSA Jeddah, Yanbu Hotels
TBY talks to Rafique Izhiman, Area General Manager KSA Jeddah/Yanbu Hotels & General Manager, Intercontinental Hotel Group (IHG), Jeddah, on the role the firm plays in the market, expanding its footprint in the country, and expectations for 2017.
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