Aramco’s public offering after Crown Prince Mohammed bin Salman finally decided to offer shares in the world’s largest oil producer. The kingdom cut taxes on the company for the third time, revealed incentives for investors not to sell and is considering boosting dividends further. Yet the Saudi government has already conceded the company probably isn’t worth the $2 trillion valuations Prince Mohammed has long advocated.
More than three years after the IPO was first mooted, Aramco published a so-called intention to float, the most dramatic change to the Saudi oil industry since the company was nationalized in the 1970s. The IPO is a cornerstone of Prince Mohammed’s Vision 2030 plan to make the Saudi economy ready for the post-oil era.
Saudi Arabia is aiming for a valuation of between $1.6 trillion and $1.8 trillion, according to people familiar with the matter. Analysts at banks working on the deal offered wildly diverging estimates: Goldman Sachs Group Inc. told investors Aramco is worth between $1.6 trillion and $2.3 trillion. Bank of America, another top bank on the deal, had the bottom of its range at just $1.2 trillion. BNP gave an estimate of $1.42 trillion.
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