This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.
Following a series of false starts, Saudi Aramco is finally moving forward with its blockbuster initial public offering.
The world’s largest oil company announced its intention to
float shares on the Tadawul exchange in Riyadh, following approval from the
country’s regulators. Here’s what we know:
- The company posted a $68 billion profit for the first nine months of this year, down 18% on the same period in 2018. Profit for the whole of last year was $111 billion.
- It is expected to make its stock market debut early next month.
But other key metrics are still shrouded in secrecy:
- It did not offer potential investors key details around net income figures or share how much of the company will be sold.
- Saudi Aramco’s valuation is yet another giant question mark. Prince Mohammed has said it would land a $2 trillion valuation, though the energy giant and its bankers are looking at a target closer to $1.7 trillion. And other analysts have pegged it around $1.5 trillion. Those are pretty wide disparities.
- As CNN notes, selling even 1% of the company at the bottom of that range would fetch $15 billion, while selling 2% at the top could generate $40 billion, eclipsing the record $25 billion IPO by Alibaba in 2014.
“This is definitely a serious event that will be recorded in
the history of Saudi Arabia,” Eid Al Shamri, chief executive of investment bank
Ithraa Capital, said at his office in Riyadh as the IPO event was broadcast. “A
lot of people are talking about it. But what is the extent of the people’s
participation? We are tightening our belts.”
It’s not clear how much of Aramco will be sold to locals
before shares start trading. People are being encouraged to invest in the
kingdom’s most important asset and many Saudis see the IPO as a demonstration
of loyalty to the kingdom.
Al Shamri said he heard about people who are thinking of
selling their houses or borrowing money to buy shares. Well, that …. can’t be
good, because uncertainty looms and no one knows what the payoff will be.