Saudi Aramco wanted to tackle the targeted $2 trillion valuation for its initial public offering (IPO) by increasing dividends, paying fewer taxes and discovering cornerstone investments from major Asian oil producers.
The moves, which came as the state-run company said it had reinstated all output halted by attacks on its main crude-processing facility last month, show preparations are quickening for the listing, with the goal of offering shares on the Saudi bourse as soon as November. The IPO is the centrepiece of Crown Prince Mohammed Bin Salman’s plans to restore the Saudi economy and release billions in capital for the kingdom’s sovereign wealth fund. The steps taken to make Aramco a more appealing investment and guarantee demand for shares come amidst scepticism that the prince’s valuation is attainable.
If the kingdom meets that target, the proposed pay-out of $75bn next year would still leave dividend yields less than those already offered by rivals like Exxon Mobil and Royal Dutch Shell. While Aramco is the world’s most lucrative company and produces about 10 per cent of the world’s oil, it also carries bigger risks, as illustrated by the drone and missile strike on key facilities in September. The 2020 payment is part of plan for a developing, progressive dividend to investors, according to a corporate presentation posted on the company’s website on Monday.