Market reacted strongly to the Saudi Aramco-proposed share price in the range of SR30-32. Banks in the Eastern Province Sunday worked overtime to meet the requirements of prospective individual and institutional buyers. The assigned banks have already started taking bids from investors.
Bankers and financial investors say that the trend is extremely encouraging and investors are raising funds in a big way to to buy as many shares possible.
Some Saudi banks had already announced that they will be extending the working hours in all branches participating in the IPO.
Some banks in the eastern regions of the country announced the extension of work for three hours to give opportunity for those coming from abroad to contribute to the IPO.
Saudi Aramco’s listing on the local stock market (Tadawul) will strengthen the government’s net asset position, with the proceeds potentially raising the Kingdom’s longer-term economic growth,
The bulk of the funds raised will go to the government or the Public Investment Fund (PIF) strengthening the state economy and boosting non oil industry, thus, fulfilling the Vision 2030.
According to market reports real estate is getting a real beating as several investors are selling their properties at throw away prices to raise funds for Aramco’s shares. Banks have confirmed that it has scores of loan applications against lands and built houses and commercial centers.
Saudi Aramco said it aims for a valuation of $1.6 trillion to $1.7 trillion from the initial public offering which will be the world’s biggest ever IPO.
In a statement Sunday, Aramco said that it aims to price the offering at between 30 and 32 Saudi Arabian riyal for each share and sell a small stake of 1.5% or 3 billion shares in the IPO. Financial commentators say that It would give the company a total valuation of $1.65 trillion.
According to a Wall Street Journal report, in the low-interest-rate environment, Aramco’s attraction for many investors is the steady and potentially growing cash flow it can generate from its operations in the form of dividends. At the midpoint of the targeted IPO valuation range, the oil producer would generate a dividend yield of about 4.5% based on an initial annual dividend payout of $75 billion. By setting a target valuation below $2 billion and thus a higher dividend yield, Aramco is guaranteeing investors healthy return from a company that will remain an arm of the country even after going public. The government will continue to own the vast majority of the company, minimizing the influence of minority shareholders.
SOURCE : ALBILAD
