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Saudi officials 'disappointed' by level of foreign interest in Aramco IPO: report

The much-anticipated IPO of Saudi Aramco will begin on Sunday [Getty]

Date of publication: 16 November, 2019

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The long-delayed IPO of Saudi Aramco is just a day away, however reports suggest that the IPO's issuer is in for disappointment from foreign investors.
Saudi officials are reportedly unhappy with the disappointing level of foreign interest in its upcoming IPO of Saudi Aramco, according to a new report.

Two sources who spoke to the Financial Times said those behind the much-delayed public offering said that domestic demand was not matched by that of foreign investors.

“The issuer expressed high levels of dissatisfaction with what they were hearing,” said one of the FT sources familiar with the matter.

Aramco's long-awaited public offering will begin on Sunday and will close for individual investors on November 28 and for institutional investors on December 4. The company's shares will be priced on December 5, according to the prospectus, and trading could begin as soon as December 11 according to state-linked media.

Aramco has not yet unveiled plans to list more of the company on an international exchange, although there have been talks with major world exchanges in recent years.

The company has stated its plans to pay out an annual dividened of at least $75 billion starting in 2020, but questions linger over Aramco's real worth.

While the kingdom's controversial de-facto leader and Crown Prince Mohammed bin Salman has priced the company's value at $2 trillion, analysts estimate the value is closer to $1.5 trillion.

“Two or three weeks ago there was still hope of [a valuation] above $1.5tn, now I don’t know,” said one banker who spoke to FT.

Based on a $1.5 trillion valuation, a two percent stake sale would help Aramco raise $30 billion.

In the run-up to the long-awaited IPO, reports suggest Saudi Arabia is pressuring its wealthy citizens to invest in the upcoming Aramco IPO.

Among those approached by the kingdom's government to buy stock in Aramco are the wealthy Olayan family and Prince Alwaleed bin Talal.

Prince Alwaleed, who was ranked by Forbes as the world's 45th richest person in 2017, was the most high-profile detainee among 350 suspects rounded up by Saudi authorities in a 2017 anti-corruption drive and held in Riyadh's Ritz-Carlton hotel. 

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