Oh The Humanity! Saudi Aramco IPO Goes For Only $1.5 Trillion, Not The $2 Trillion Expected
You’d have to be a Saudi prince soaking in oil riches to find $1.5 trillion — the value of more than five Exxon Mobils — too small a sum, but that’s where Saudi Aramco is today.
The kingdom’s state-owned oil behemoth had been fishing for international investors to buy into its IPO, with visions of a $2 trillion valuation dancing in its head; although it would have settled for $1.6 trillion, or roughly two Amazon.coms. It came back instead with that $1.5 trillion number — only barely bigger than one Microsoft, the horror! That crushed its dreams, forcing it to trim the IPO and aim it mainly at a (sometimes literally) captive audience of Saudi citizens. Oh, and those citizens will pay dearly for the privilege, often borrowing from Saudi banks to do so, notes Liam Denning:
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This disappointing new approach defeats the original strategic purpose of the IPO, which was to make Aramco more of a modern, free-range enterprise, write Chris Hughes and Liam Denning.
Matt Levine suggests even a limited, controlled-burn IPO will generate a tradeable stock price that could eventually entice foreign investors. The trouble is that, unless Aramco soon gets into an entirely different business — co-working space, say, or cryptocurrency — it will still be a mammoth producer of oil and its byproducts. These are not exactly in favor among investors lately, notes Julian Lee; and the more the warming world burns, floods and chokes on plastic pollution,the less appealing an investment Saudi Aramco will be — and the better that mere $1.5 trillion will look.
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https://www.bloomberg.com/opinion/articles/2019-11-18/saudi-aramco-s-ipo-set-on-fire-by-global-warming