Before the listing

If IG offers a ‘grey market’ ahead of the Saudi Aramco IPO, you could speculate on the company’s share price before it lists on an exchange. We base the price of a grey market on our prediction of a company’s market capitalisation by the end of its first trading day. This enables you to ‘buy’ or ‘sell’ depending on the direction you think the market cap will take.

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What could the Saudi Aramco share price be when it floats?

The Saudi Aramco share price will depend on the final valuation and the amount of shares the business will release to the public. The Saudi kingdom plans to sell a mere 5% of the company’s shares, with the majority remaining the property of the sovereign government. After the listing, the share price will fluctuate as supply and demand changes.

Why is Saudi Aramco going public?

Saudi Aramco was originally planning on going public to raise capital for the kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), which it was expected to join. At the time, it was anticipated that the listing would push the fund’s value up to $3 trillion. However, the PIF no longer needs the cash injection so Saudi Aramco is now focusing on raising money for its own diversification and is no longer expected to be brought under the PIF’s umbrella.

What is the outlook for Saudi Aramco?

The outlook for Saudi Aramco is mixed, as a few factors should be taken into consideration when forecasting the future of the company. The short-term outlook is based mainly on its exposure to oil – therefore, the oil price. If there is an uptrend, Saudi Aramco should be pleased with the investment bank’s decision at the time of the IPO. However, fears of a recession in the US might have a negative impact on petroleum demand.

The long-term outlook will depend on the outcome of the IPO. The point of the listing is to diversify and move away from industry trends surrounding fossil fuels. If it can execute its plan, the outlook could be positive. It has already started its expansion by way of the recent acquisition of a 70% stake in Saudi petrochemicals giant SABIC.

How has Saudi Aramco been performing?

Saudi Aramco has been growing its revenue every year, while cutting production costs and reducing its carbon footprint. In 2017, net income was $75.9 billion, increasing to $110.1 billion in 2018. The half-year report for 2019 revealed net income of $46.9 billion. The company has managed to cut extraction costs of crude oil to just $7.50 a barrel and overheads are only $1.50 per barrel. Oil production in 2019 is expected to reach 12.5 million barrels a day.

Who are Saudi Aramco’s competitors?

Saudi Aramco’s competitors include Shell (£223 billion), BP (£102 billion), Chevron (£224 billion) and Exxon Mobil (£295 billion), but it trumps all these companies in terms of market cap and revenue. Surprisingly, Saudi Aramco was formed much later than its competitors, it has the least number of employees and it is the only conglomerate between the five that hasn’t listed.

Saudi Aramco management team

There are seven key executives on Saudi Aramco’s corporate management team

Who are the Saudi Aramco IPO advisors?

Saudi Aramco has three independent IPO advisors and three global coordinators (underwriters). However, recent reports have stated that the structure might change before the IPO.