Saudi Aramco kick-starts IPO today

Saudi Aramco, the world's largest oil exporter, will launch today, Nov. 17 its initial public offering (IPO) for retail and institutional investors.

The retail offering will close on Nov. 28, while the deadline to submit bid forms for institutional investors is set for December 4.

The major oil producer's share sale could be the biggest in history, beating the $21.77 billion (SAR 81.6 billion) raised in Chinese e-commerce giant Alibaba's 2014 IPO.

State-run Saudi Aramco will also set today the IPO price range, while the offering size and final price will be disclosed on Dec. 5, following the completion of the book-building process.

Retail investors in the world’s biggest IPO will have to bid at the top end of the price range. The Saudi oil producer will sell up 0.5%, or 1 billion shares of the total offer shares to retail investors.

The market regulator has issued some exceptions to streamline the giant oil producer's IPO, including the disclosure of the offering value and number of offered shares, and the offered stake.

Offering shares to institutional and retail investors at the same time will cut the period between the final allocation of shares and the debut date on the Saudi Stock Exchange (Tadawul).

The following table illustrates the retail and institutional offering periods:

Key highlights:

Saudi Arabian Oil Co. (Saudi Aramco) was established as a limited liability company by virtue of Royal Decree dated on Nov. 13, 1988. The company is wholly-owned by the Saudi government and has paid-in capital of SAR 60 billion, divided into 200 billion ordinary shares without par value.

The offering will not impact the company's capital or its total issued shares.

In 1993, the company assumed the assets and operations of Saudi Arabian Marketing and Refining Co. (Samarec), a government-owned in-Kingdom refining and international product marketing organization. Samarec had joint ventures with Shell (SASREF) and Mobil, which later became ExxonMobil (SAMREF).

Later on, the company entered into additional ventures with: Dow (Sadara); Lanxess

(ARLANXEO); Petronas (PRefChem); Sinopec (YASREF); Sumitomo (Petro Rabigh); Total (SATORP); Shell (Motiva); and Mobil (Luberef).

In May 2017, the company acquired full ownership of Motiva (formerly a joint venture with Shell) and ARLANXEO (formerly an associate in partnership with Lanxess) on December 31, 2018.

On Jan. 1, 2018, Saudi Aramco was converted into a joint stock company and was registered in the city of Dhahran.

Saudi Aramco's operates mainly in all energy-related activities, including hydrocarbon and chemical industries, along with other related industries or any other business inside or outside the Kingdom.

Key IPO Data:

1) Institutional investors:

The institutional subscribers eligible to participate in the book-building process, as follows:

- Public and private funds that invest in securities listed on the Exchange, if permissible according to the terms and conditions of such funds, in compliance with the provisions and restrictions set forth in the Investment Funds Regulations and the book-building instructions;

- Authorized persons licensed to deal in securities as a principal, in compliance with the provisions set forth in the CMA’s prudential rules, when submitting an application form to the CMA;

- Clients of a person authorized by the CMA to conduct managing activities with the provisions and restrictions set forth in the book-building instructions;

- Legal persons allowed to open an investment account in the Kingdom, and an account with the Depositary Centre. With the exception of non-resident foreign investors, other than qualified foreign investors as per the QFI Rules, in compliance with the controls on investment by listed companies in the securities listed on the exchange.

- Government entities, any supranational authority recognized by the CMA, the Exchange, or any other stock exchange recognized by the CMA, or the Depositary Centre;

- Government owned companies, whether investing directly or through a portfolio manager; and

- GCC companies, and GCC funds if permissible according to the terms and conditions of such funds.

2) Retail investors:

- Saudi Arabian nationals, including any Saudi female divorcee or widow with minor children from a marriage to a non-Saudi person who can subscribe for her own benefit or in the names of her minor children, on condition that she proves that she is a divorcee or widow and the mother of her minor children, any non-Saudi natural person who is resident in the Kingdom and any GCC national, in each case who has a bank account with one of the receiving entities.

Each individual investor who subscribes to the offer shares must submit a retail subscription form and must subscribe at the highest price set forth in the offer price range (the retail subscription price).

If the final offer price is lower than the retail subscription price, the individual investors opt to:

1) have any surplus subscription amount resulting from the difference between the retail subscription price and the final offer price refunded in cash by crediting the account of such individual investor

2) An allotment of additional offer shares in consultation with the joint financial advisors and the joint global coordinators. The remaining surplus subscription amount will be refunded in cash by crediting the account of such individual investor.

Individual investors must specify their choice in the retail subscription form, including, in the case of fractional shares, an amount with respect to such fractional shares. If there are no additional shares allocated, the remaining surplus subscription amount will be refunded by crediting the account of such individual investors.

Each individual investor must submit a retail subscription form and must subscribe in multiples of ten, with a minimum subscription of ten offer shares. There is no maximum number of shares that can be applied for by Individual

Investors.

Retail subscription forms cannot be amended or withdrawn once submitted. They will be available during the offering period at the receiving entities, and investors are required to fill out the form sections.

Individual Investors who have recently participated in previous initial public offerings in the Kingdom can also subscribe through the internet, telephone banking or ATMs of any of the receiving entities, provided that the following requirements are satisfied:

- The Individual Investor must have a bank account at the receiving entity which offers such services; and

- There have been no changes in the personal information or data of the individual investor since such person last participated in an initial public offering.

Additionally, each eligible retail bonus investor who continuously and uninterruptedly holds offer shares for 180 days from and including the debut date on Tadawul will be entitled to receive one bonus share for every ten allocated offer shares so held, up to a maximum of 100 bonus shares.

Saudi Aramco has named Goldman Sachs Saudi Arabia as the IPO Stabilizing Manager, allowing it to purchase an additional number of Shares equal to up to 15% of the total number of shares sold in the offering  at the final offer price.

By the close of the offering, the Saudi government will sell shares worth SAR 3.75 billion based on the final offer price to the company, to be used under the share plan.

Additional IPO Data

For more details about Saudi Aramco IPO