The government of Saudi Arabia decided to trust to regional investors

First IPO of the state oil company Saudi Aramco has been unsuccessful, so the government of Saudi Arabia decided not to take risks. One of the main action for the protection of the state's capital is the rejection of the servants of the world's largest funds. Authorities believe that we need to give regional investors, or the economy of the Kingdom may form a bubble.


Adjustment of IPOs have engaged in such companies as Goldman Sachs, Morgan Stanley, Credit Suisse, JPMorgan and Citigroup. After the instructions of the authorities the issue of shares will be engaged in Saudi companies such as the Samba Capital NCB. Sources indicate that Riyadh is interested in the neighboring investors, preferably from the Gulf countries.


Foreign investors were only British company HSBC. Such cooperation is due to the fact that HSBC owns a good share of Saudi British Bank, which is the largest in the country.


Even before it was announced the release of the IPO, the leaked data, which stated that the transaction amount reaches about two trillion dollars. After the world banks gave their predictions. Goldman Sachs said that the price will fall to USD 1.6 trillion, and Bank of America to 1.22 trillion USD. The government missed forecasts by, so the price rates were lowered to 1.7 trillion U.S. dollars.


Data on the volume of placing will be announced on 5 December 2019. The first sale of shares will take place on the Saudi stock exchange Tadawul. Investors say that the market will initially produce 1.5 percent of the company's shares, the value per share will be in the range of 8-8,5 USD for one unit.


If you look at the situation from the IPO, you can monitor the real facts that influence the imbalance prices. A clear example would be a drone strike at the largest oil plant in Saudi Arabia, then oil production had to be cut in half. Since the government could not guarantee security, it is hard to believe that the income from the shares will be stable.


According to analysts, the deal is the IPO of Saudi Arabia could become the biggest in history. But at the moment the revenues of the Kingdom from the transaction are estimated at 24 billion USD, while as in 2014, the Chinese company Alibaba has attracted the state is 25 billion USD. New shares of the company Saudi Aramco will be sent to the national welfare Fund, which is subsequently used for economic reforms.

22 November, 2019

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