November 9, 2019 / 2:50 PM / 4 days ago

Saudi Aramco targets sale of 0.5% of oil firm to retail investors in IPO: sources

DUBAI (Reuters) - Saudi Aramco is looking to sell up to 0.5% of the state oil giant to retail investors in its planned initial public offering (IPO), three sources familiar with the matter told Reuters.

FILE PHOTO: A view shows branded oil tanks at Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019. REUTERS/Maxim Shemetov/File Photo

The Saudi oil group has not yet revealed the size of its planned IPO or what proportion of the company it will float, although sources have previously said this could be 1-2%.

Aramco declined to comment.

It is expected to release more details about the company in an IPO prospectus document later on Saturday.

Assuming Aramco achieves a total valuation of $2 trillion, the retail tranche could be worth around $10 billion, the sources said on Saturday.

Aramco fired the starting gun on the domestic IPO last week after a series of false starts. It did not give details on how much would be sold, or when the listing would happen, while expert valuations vary from $1.2 to $2.3 trillion.

A government committee has met in the past few months with dozens of wealthy Saudi individuals to secure pre-sale agreements, sources told Reuters last month.

And the government has encouraged investors to repatriate cash held overseas to buy into the IPO to avoid draining too much liquidity from the Saudi banking system, they said.

Reuters reported on Oct. 17 that Aramco can take advantage of new market rules that allow issuers the flexibility to sell more shares to retail investors, likely exceeding the usual 10% seen in recent IPOs.

“Local demand is strong,” a second source said on Saturday, adding that this would lead institutional investors to think that up to 75% of the IPO would be available for them.

Editing by Alexander Smith

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