Name: Why foreign investors questioned Aramco's IPO valuation | FT
Uploaded: 2020-03-07T16:21:57.000Z
Duration: 2 min 34 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Back in January 2016 Mohammed bin Salman, the Crown Prince

of Saudi Arabia, revealed a plan to list the shares of state oil

5 per cent of this company to investors in order to bolster

Now, back then, the oil price traded at half today's $62

No surprise that Saudi Arabia wanted as high a valuation as

Unfortunately, the kingdom's valuation expectations

$2tn was the right amount well before any banking advisers had

Lex, after doing some financial modelling back in 2017,

now thinks the valuation should be closer to $1.2tn.

Most other analysts also believe the Saudi valuation

to be pricey, including their own global advisers

That did not stop bankers from organising roadshows

These meetings do not appear to have gone very well.

While recent bond offerings for Saudi Aramco have gone well,

issuing shares turned out to be much trickier.

International equity fund managers clearly

did not like what they heard, and banks insisted they listen.

But the listing would only be on the Saudi stock exchange,

one for which not many foreign investors have any experience.

Aramco would be, far and away, the largest company

Portfolio managers also worried about the security

Saudi Aramco suffered an attack in September of this year.

Later, the company offered a substantial dividend,

But pestering fund managers to take up an IPO only puts them

off, as they will fear no one else wants to buy.

In the end, the final price was lower and the sale portion less

Still, nothing enticed international investors -

outside the Gulf, at least - to put in big orders.

For now, most of the shares sale at a high valuation -

closer to $1.7tn - will go to investors in Saudi Arabia

and the Gulf, not at all what was originally intended.

Subtitles ListPlay Video

Why foreign investors questioned Aramco's IPO valuation | FT

reveal

experience

tricky

fear