Name: Unraveling the World's Largest IPO
Uploaded: 2019-12-13
Duration: 3 min 11 s
Description: Saudi Aramco, the world's biggest energy company, is headed for an IPO. But will the plan go off without a hitch?

[MUSIC PLAYING] It was supposed to be the biggest public offering of all time, finally giving global investors a chance to make money on Saudi Arabia's vast oil reserves. But now because of a mix of geopolitics and royal intrigue, the IPO of Saudi Aramco, the national oil company of Saudi Arabia and by far the biggest energy company in the world, may be the IPO that never was. But we're getting ahead of ourselves. Let's go back to April 25, 2016. [NON-ENGLISH SPEECH] [NON-ENGLISH SPEECH] This is Deputy Crown Prince Mohammed bin Salman. In April 2016, he unveiled his plan for the economic future of Saudi Arabia, Vision 2030. And while there's a lot that the country hopes to accomplish by 2030, most of these hopes hinge on the country putting 5% of Saudi Aramco on the public market. That's right, when we said the IPO would be the largest in history, that's only with the company putting 5% of itself up for sale. Wall Street analysts estimate Aramco's total market value is somewhere between $1 trillion and $1.5 trillion. And 5% of that would really help the country's economic outlook. The crash in crude oil prices that started in 2014 has taken a toll on Saudi Arabia. Oil accounts for roughly 97% of the country's export earnings. The sale of 5% of Saudi Aramco would offer a quick injection of revenue for the government to help diversify the economy. Right now the country's economic future is entwined with oil's. Vision 2030 is an attempt to change that. But the IPO fought an uphill battle from the start. Saudi Aramco currently only has just one stakeholder, the Saudi king. Until now the company's assets have been a black box. And many suggest that the identification of a market value is not in the royals' best interest. Saudi Arabia has maintained for decades that it has 260.8 billion barrels of recoverable oil reserves. But that number has never fluctuated. Any changes would impact the valuation and maybe not favorably. And then there are problems for potential shareholders. It could be risky to take on only a portion of a 5% minority stake in a company largely reporting to the needs of the Saudi government. But it seems as though an alternative to the IPO has gained momentum. The Financial Times reports that the oil mammoth may be considering a private share sale instead. The buyers? Analysts' best bet is China. And the deal makes sense. Saudi Aramco wouldn't need to publicly reveal anything, and China would have a new tap. Saudi Aramco, for its part, still insists the IPO process remains on track. But will letting in the light with an IPO really be worth it? 

Unraveling the World's Largest IPO

Energy

Saudi Aramco, the world's biggest energy company, is headed for an IPO. But will the plan go off without a hitch?

It was supposed to be the biggest public offering of all time, finally giving global investors a chance to make money on Saudi Arabia's vast oil reserves. But now, because of a mix of geopolitics and royal intrigue, the IPO of Saudi Aramco, the national oil company of Saudi Arabia and by far the biggest energy company in the world maybe the AIPO that never was. But we're getting ahead of ourselves. Let's go back to April 25th 2016. I only hold out of Salem are like more loyal worker tow truck. Is this really how you come? You have a Democrat and letting me help. You can get a lot of years now, really, What you added, Brody Alameda 100 Missile Man will have Hey, good morning. This is Deputy Crown Prince Mohammed bin Salman. In April 2016 he unveiled his plan for the economic future of Saudi Arabia Vision 2030. And while there's a lot that the country hopes to accomplish by 2030 most of these hopes pinned on the country putting 5% of Saudi Aramco on the public market, that's right. When we said the idea would be the largest in history. That's only with the company putting 5% of itself up for sale. Wall Stree analysts estimate Aramco's total market value is somewhere between one trillion and $1.5 trillion and 5% of that would really help the country's economic outlook. The crash and crude oil prices that started in 2014 has taken a toll on Saudi Arabia. Oil accounts are roughly 97% of the country's exports. The sale of 5% of Saudi Aramco would offer a quick injection of revenue for the government to help diversify the economy. Right now, the country's economic future is entwined with oils. Vision 2030 is an attempt to change that, but the I P O fought an uphill battle from the start. Funny, Aramco currently only has just one stakeholder, the Saudi king. Until now, the company's assets have been a black box, and many suggested the identification of a market value is not in the royal best interest. Saudi Arabia has maintained for decades that it has 260.8 billion barrels of recoverable oil reserves, but that number has never fluctuated. Any changes with impact evaluation and maybe not favorably on. And then there are problems for potential shareholders. It could be risky to take on on Lee a portion of the 5% minority stake in a company largely reporting to the needs of the Saudi government. But it seems as though an alternative to the I p o has gained momentum. Financial Times reports of the oil mammon may be considering a private share sale. Instead, the buyers, analysts best bed China and the deal makes sense. Saudi Aramco wouldn't need to publicly reveal anything, and China would have a new tab. Saudi Aramco, over its part, still insists the I b O process remains on track, but we're letting in the light with an I b o really be worth it, no.