First Shares Could Be in the Business in Two Weeks
The step was supported last week both by Saudi Mohammad bin Salman, the Crown Prince of Saudi Arabia, and Capital Market Authority of Saudi Arabia.
If everything goes accordingly to the plans, Saudi Aramco’s entry to the Stock Market could overcome the entrée of Alibaba. China’s biggest online commerce company, considering the value of subscribed shares. The company received $25 billion Dollar in its Initial Public Offering (IPO).
It is not yet sure what stock share Saudi Aramco will introduce. It’s expected that it should be 1 or 2 percent. It would equal to the value of $20 to $40 Billion Dollar. The representatives of Saudi Aramco were still in discussions on the value of the company with potential investors this Friday. Saudis wanted to reach $2 Billion Dollar, while the investors were trying to persuade them to lower the price up to the line of $1,5 Billion.
The share price depends on evaluation of the company as a whole. In case the estimated price is high, the interest of the investors could not be huge. Investors are interested in dividend yield, which they compare to other mining companies. Therefore, if the price of Saudi Aramco’s shares is too high with shares bond, the expected dividend yield decreases and so does the willingness of investors to buy their shares.
Rumors on Saudi Aramco entering the Stock Exchange have been spread since the beginning of 2016. Muhammad bin Salman confirmed to The Economist that he would like to offer a part of the company to private investors those days.