The initial sales pitch for Saudi Aramco, the world’s largest initial public offering, was pretty clear when it was launched on Sunday: This company can pay chunkier dividends for longer, and more reliably, than any other big oil major. The hope is that investors will therefore pay a premium for the shares that carry those dividend promises. Whether they do should depend on their attitude to Aramco’s singular strategic profile and emerging-market risks.
Saudi Arabia has finally kicked off the long-anticipated share sale, having accepted that the market may not ascribe the $2 trillion valuation Crown Prince Mohammed bin Salman had sought for the kingdom’s state-owned oil producer. While there’s no price range just yet, bankers may target a $1.6 trillion to $1.8 trillion valuation, according to Bloomberg News. Factor in the standard 10% to 15% discount on IPOs, and that is where you would pitch a $2 trillion offering anyway.