Top 5 facts about Saudi Aramco's IPO
Read everything you need to know about Saudi Aramco's planned IPO, as revealed by Saudi deputy crown prince Mohammed Bin Salman
Saudi deputy crown prince Mohammed bin Salman said he is pushing for Saudi Aramco's initial public offering (IPO) to be launched in 2017.
He said the move will form part of the Kingdom's plans to create a Public Investment Fund (PIF), and boost privatisation in the Kingdom.
Prince Mohammed also said there "is no doubt" Aramco's IPO will be open to foreign investors.
The royal has now revealed fresh details about the expected IPO. Read on to discover these plans.
Next page: What will the value of Aramco's IPO be?
Aramco IPO: Value
Prince Mohammed said he believes PIF will become the world's largest fund if Aramco's shares are transferred to its hold.
"I believe this will happen as soon as Aramco goes public," he continued.
When prodded by Bloomberg about the value of this initiative, Prince Mohammed said it is "hard to evaluate Aramco now".
"But we’re working on it.
"However, undoubtedly, it will be larger than the largest fund on earth. We will surpass $2 trillion," he continued, according to Bloomberg.
"We’re talking about less than 5%," he said, responding to a query about how much of Aramco would be listed initially.
Next page: What will Aramco's IPO comprise?
Aramco IPO: Components
Prince Mohammed revealed Aramco's "mother company" will be offered to the public, as will be some of its subsidiaries.
"We will also announce Aramco’s new strategy and will transform it from an oil and gas company to an energy/industrial company," he continued.
Responding to a Bloomberg query about the size of the assets to be listed, the royal said "many projects" are being targeted.
"Most important is building the first solar energy plant in Saudi Arabia," he continued.
"Aramco is now the biggest company in the world and it has the capability of controlling the shape of energy in the future and we want to venture into that from today.
"Also, we want to develop the petrochemicals market that depends on oil and the services provided by some of the oil derivatives as well as some of the industries that we might create given the size of Aramco."
Prince Mohammed hinted at the creation of a construction company "under Aramco".
"For example, we could create a huge construction company under Aramco that will also be offered to the public and that services projects other than Aramco’s projects in Saudi," he explained.
"So all these projects that we announce will be how we transform Aramco from an oil and gas company to an industrial and an energy company."
Next page: Why is Aramco launching the IPO?
Aramco IPO: Intent
Prince Mohammed said there will be numerous benefits from Aramco's IPO, besides simply improving Saudi's liquidity.
"Many were saying that the idea of IPOing Aramco was just an attempt to get liquidity to cover Saudi financial needs, but that’s far from the truth," he continued.
"The objective is to diversify income. This is the main objective.
"Therefore, IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil.
"So within 20 years, we will be an economy or state that doesn’t depend mainly on oil, whether from profits of the PIF or other sources of income that we target," he added.
"So this is one of the benefits of listing Aramco, other than the benefit to the Saudi market, the benefit to the Saudi economy in general and the benefit to the continuity of Aramco and its growth," he added, according to Bloomberg.
Next page: When will the IPO be launched?
Aramco IPO: Timeline
Prince Mohammed also said there "is no doubt" Aramco's IPO will be open to foreign investors, and will "without a doubt" be in the market by 2018.
He continued: "I’m trying to push for it to be in 2017.
"Aramco will greatly benefit, not only the fund, but also the Saudi economy as a whole."
Next page: What's next for Aramco?
Aramco IPO: Future plans
Aramco's future plans include expansions across Asia, Prince Mohammed revealed.
"We target emerging markets like China, India, South Africa, Indonesia.
"We believe these are the main markets that we are targeting.
"We’re also targeting the US market, including the recent deal we’ve made with Shell," he continued.
Responding a query about the future of Saudi Arabia Basic Industries Corporation (SABIC) in light of Aramco's IPO, Prince Mohammed said the companies would continue to function independently.
"Sabic and Aramco are two independent companies, but both will have a majority ownership by PIF," he continued, as per Bloomberg's report.
"We as owners, it’s important to us not to have conflict between our companies.
"There was a conflict between the two companies that we resolved over the past few months. This will increase the profitability of both Aramco and Sabic."