Investment bankers are releasing their final recommendations on the value of the Saudi Arabian Oil Company Aramco as early as Friday, according to The Wall Street Journal.
Saudi Arabian Crown Prince Mohammed Bin Salman (MBS) has expressed public;y that he wants the initial public offering (IPO) to value Aramco at $2 trillion. The investment banks tasked with valuing the company include JP Morgan Chase, Goldman Sachs Group Inc., and Morgan Stanley. The target of $2 trillion has received some resistance from the group working on the public offering, suggesting an IPO of $1.5 trillion is more realistic.
MBS has been attempting to reform Saudia Arabia's economy, making it less dependant on oil. The plan was to list at least 5 percent of Aramco through a domestic and later planned international listing, which would allow Saudi Arabia to raise billions of dollars and diversify the economy. The challenge lies within settling on a valuation that attracts a sufficient amount of investor demand and ensures enough money is raised for the reform of the Saudi Arabian economy.
The IPO was originally scheduled for launch in 2018 but was delayed due to questions over the valuation and venue for the international listing. The valuations at that time ranged from $1.3 trillion to $1.7 trillion. As society becomes more environmentally aware, investors attempting to get away from fossil fuels have also proved a hindrance.
The valuation from underwriting investment banks will be released soon, and will hopefully satisfy Saudi Arabian Crown Prince Mohammed Bin Salman's expectations as well as investors.