[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')he Saudi Aramco IPO is running into more trouble. Not only did they fail to list the IPO on a major western exchange as they proposed JUST AS I PREDICTED HERE ON THE PAGES OF PEAKOIL.COM FOR THE LAST SEVERAL YEARS, but they have just cancelled the "roadshow" they were going to present in New York and London to entice western institutional investors to invest in the IPO which has now been relegated to the teeny tiny Saudi Arabian stock exchange.

[Plantagenet]

Three reasons why the Saudi Aramco IPO is already a failure ----its already missed the three main goals it had for this IPO

saudi-aramco-flotation-is-a-failure-before-it-has-even-begun

1. Prince Muhammad spent years touting the value of the IPO as north of 2 trillion dollars, but now the Saudis have been forced to reduce the value of the Saudi Aramco IPO significantly. The latest estimate has it down to 1.7-1.6 Trillion

2. A second goal of the IPO was to gain significant international investment in Saudi Aramco......but international interest has been tepid at best. Saudi Aramco has cancelled traveling roadshows sent to Asia, Europe and North America to promote the IPO, and now is targeting local Saudi billionaires and retail investors. The Saudi bank is even offering special loans to Saudis to enable them to buy stock in Saudi Aramco.

3. A third goal of the Saudi Aramco IPO was to get the company listed on a major international stock exchange in New York or London or a similar prestigious bourse in the west. I quote from the link above: "The third original ambition .... was to get Aramco listed on a foreign stock exchange as well as the local Tadawul market. That is why, for example, London’s financial dignitaries made a beeline to Riyadh and why the Financial Conduct Authority, embarrassingly, rewrote its listing rules to accommodate state-controlled behemoths in its “premium” category. But the IPO was redesigned as a Tadawul-only affair a while back and there is no timetable for when, if ever, a secondary listing on a foreign exchange will be pursued."

And, of course, this third point is key to the problems they are having now that they have settled for listing only on the local Saudi stock exchange. Saudi Aramco's inability to get their IPO listed on a western stock exchange makes the IPO much less appealing to international investors because investors see there is a lack of transparency in an offering done only on a teeny tiny stock exchange in Saudi Arabia that is very close to the royal family which also controls Saudi Aramco. The fact that the IPO is only listed in Saudi Arabia in turn reduces overall international interest in the IPO, and the lack of demand from international investors results in turn in the huge drop in value for Saudi Aramco.

All of this is turning out just as I predicted. I know people are supposed to say they take little joy when their dire predictions turn out to be true, but this is giving me considerable joy because the argument over this IPO stretched over several years. Its rare that one achieves complete victory over an opponent who was so nasty and therefore so much deserved to lose, but that is the situation here. Again and again I predicted that Saudi Aramco would not be able to list on a western exchange, and so it has come to pass. And the secondary ramifications from my prediction.....well, according to the article I link to above, those are all coming true as well, just as I predicted. Verily, I am happy to say that I am now proven correct and the victor in my central argument on this thread!!!


What they say is true: VICTORY IS SWEET

Cheers!

[rockdoc123]

$this->bbcode_second_pass_quote('', 'b')ut now the Saudis have been forced to reduce the value of the Saudi Aramco IPO significantly. 

[rockdoc123]

Here is an interesting take on how international companies might be able to make a bit of profit on the Tadawul Aramco IPO. Was in Forbes this week

$this->bbcode_second_pass_quote('', 'T')here is already, and will continue to be, excitement for the IPO in Saudi Arabia. Moreover, in the absolute monarchy, wealthy families and big businesses are being pressured by the government and will need to comply. The retail investors are being incentivized to hold their shares for at least 6 months, and the wealthy and big businesses will be concerned about selling too soon and attracting the ire of the monarchy.

There is a good chance there will be particularly low volume in the hours, days, weeks and even months following the IPO. Not enough Saudis will be selling. The king and the crown prince do not want this IPO to be a failure, so they will push for the price to rise, perhaps even using government or PIF funds. Politically, for the monarchy, the rise of the share price—at least early on—must be inevitable.
With low volume, domestic excitement and authoritarian pressure, there could be an opportunity for foreign funds to buy in and then sell before the domestic Saudi population is able to. But those foreign funds would have to sell before the six-month lock up period is over. After that, the government will be free to sell more shares, which it has said it intends to do. Also, after six months, Saudi retail investors will have received the incentives for holding their positions, and some will begin to sell.
Of course, this is just one potential scenario. There is no way to know for sure if the centralized control the Saudi monarchy hopes to exert over this IPO will work and send Aramco’s share price rising in the first few months of trading. But it is what the Saudi monarchy wants.

[Plantagenet]

There was a very interesting article in "Oilprice.com" today entitled is the Aramco IPO the "ULTIMATE PUMP AND DUMP"

Is-The-Aramco-IPO-The-Ultimate-Pump-And-Dump

Their answer....YES. The article concludes that the ARAMCO IPO, which started with such great promise has turned into your basic "pump and dump" stock sale. In the absence of much foreign interest in the IPO, the IPO is now mainly being pushed onto buyers in Saudi. The stock sale is being done with a "lock-up" period of six months, so six months out there is risk of the Saudi buyers "dumping their shares" and causing a precipitous drop in the stock price.

And why aren't foreign buyers showing much interest? Here's a quote from the article (linked above):

The fact that the shares will only be listed on the Tadawul exchange and that the dividend Aramco promises its future investors will only be paid in Saudi rials don’t sound particularly tempting for investors who would rather trade on a bigger exchange and receive their dividends in a more popular currency.

This is, of course, the issue I've been posting about on this thread for three years now. As I predicted, the Saudis were unable to do what it took to get the Saudi Aramco IPO listed on a major western exchange and that failure is now causing real problems for them.

I think I'll take another victory dance based on this complete and total corroboration of my oft-stated viewpoint in the recent report by "OIlprice.com" Its very very very pleasant to have held to what was obviously the correct view for several years and then be proven totally correct. Its like vindication. Its like justice. It just feels so good. Ahhhhhhh. Sooo Goooood,


I'm right I'm so right I'm very very very right and I told you so I told you so I told you so.

Cheers!

[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')his is, of course, the issue I've been posting about on this thread for three years now. As I predicted, the Saudis were unable to do what it took to get the Saudi Aramco IPO listed on a major western exchange and that failure is now causing real problems for them.

[rockdoc123]

The Aramco IPO on the Tadawul is moving ahead fairly successfully so far:

$this->bbcode_second_pass_quote('', '[')b]Saudi Aramco IPO's institutional tranche oversubscribed
The institutional tranche of Saudi Aramco's initial public offering (IPO) has been oversubscribed while the retail portion has received a little more than 10 billion riyals ($2.67 billion) in orders so far, a banking source told Reuters

[Plantagenet]

Kingdom of Saudi Arabia starts a new crack down on journalists and businessmen who have been critical of the regime

saudi-arabia-arrests-more-opponents-despite-sensitivity-amid-ipo-push-

Prince Muhammad stopped the internal repression of dissidents for a while after the Khashoogi murder, but recently he has started arrested perceived political opponents of the regime again. Curiously, he is doing this just as the Saudi Aramco IPO is moving towards market. You'd think he would want Saudi Arabia to look good to the international community as they consider investing in Saudi Aramco......but apparently not.

Cheers!

[rockdoc123]

$this->bbcode_second_pass_quote('', 'Y')ou'd think he would want Saudi Arabia to look good to the international community as they consider investing in Saudi Aramco......but apparently not.

[kublikhan]

$this->bbcode_second_pass_quote('', '[')b]Saudi Aramco Raises $25.6 Billion in World’s Biggest IPO
*Oil giant to overtake Microsoft, Apple as biggest listed firm
*Aramco share offering was more than 4.6 times oversubscribed

Saudi Aramco raised $25.6 billion from the world’s biggest initial public offering, closing a deal that became synonymous with the kingdom’s controversial crown prince and his plans to reshape the nation. The state-owned oil giant set the final price of its shares at 32 riyals ($8.53), valuing the world’s most profitable company at $1.7 trillion. It received total bids of $119 billion. Aramco will become the world’s most valuable publicly traded company once it starts trading, overtaking Microsoft Corp. and Apple Inc.

The deal opens up one of the world’s most secretive companies, whose profits helped bankroll the kingdom and its ruling family for decades, to investors and Saudi individuals. Until this year, Aramco had never published financial statements or borrowed in international debt markets. It will also mean the company now has shareholders other than the Saudi government for the first time since it was nationalized in the late 1970s.

[Plantagenet]

The Saudi Aramco IPO has gone to market. As I predicted, the shares priced substantially below what Prince Muhammad had hoped for resulting in a significant shortfall in the amount of cash raised by the IPO. The reason? The IPO failed to obtain a listing on a major western stock market and was relegated to the podunk local stock market in Saudi Arabia.

aramco-worlds-biggest-ipo

"The total amount raised -whether $26 or $29BN with the greenshoe - will be a huge disappointment to Prince Mohammed, who for the last four years pushed to raise $100 billion by selling 5% of the group in a global financial capital such as London or New York. In the end he had to satisfy himself with a quarter of this amount sold on a domestic market. "

In order to sell the shares, the Saudis also had to go to extraordinary lengths, including loaning money to Saudi citizens so they could buy shares, putting pressure on Saudi oligarchs to buy shares, and promising a special dividend to Saudi IPO buyers.

Now that the IPO has gone public, it will be interesting to see what kind of quarterly reporting requirements the Saudi stock exchange will put on Saudi Aramco. Personally, I'm curious to see what the oil production from Ghawar does going forward, as according to one report oil production there had fallen significantly below prior levels.

Oh....and I'm going to do another victory dance now, since I predicted that the Aramco IPO would never meet the requirements to be listed on a major western stock exchange....and today settles the matter once and for all.


Its not magic! I just get things right on a fairly consistent basis! And this was a very clear case where the Saudis were very reluctant to be fully transparent as would be required to list on a western stock exchange. And sure enough I nailed it again! Ahhh! Ohhh! I'm right again! I'm! So! Right! Again!

Victory is sweet.

Cheers!

[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')he Saudi Aramco IPO has gone to market. As I predicted, the shares priced substantially below what Prince Muhammad had hoped for resulting in a significant shortfall in the amount of cash raised by the IPO. The reason? The IPO failed to obtain a listing on a major western stock market and was relegated to the podunk local stock market in Saudi Arabia.

[rockdoc123]

$this->bbcode_second_pass_quote('', '[')b]Saudi Aramco hits $2 trillion market cap on second day of trading

The figure, nearly $1 trillion higher than the world’s next-largest public companies Microsoft and Apple, was long ridiculed by much of the international financial community.
Share rose 10% to 38.7 riyals apiece ($10.32) but slipped back to 37 riyals within minutes of the market open.

[Subjectivist]

$this->bbcode_second_pass_quote('', 'A')ramco Faces Scrutiny As COVID-19 Batters Oil Prices | Al Bawaba



CEO Amin Nasser to discuss quarterly results and outline future strategy in face of rising market uncertainty

Saudi Aramco, the world’s biggest oil company, will submit itself to two days of intense scrutiny by global investors after the biggest shock to global energy markets in decades.

The company is set to announce its financial results for the second quarter of 2020 — which witnessed the collapse of oil prices in April as global demand collapsed because of the COVID-19 pandemic — and CEO Amin Nasser and other executives will open up to questions about future strategy in an uncertain time for crude.

On Sunday, Nasser will field questions from the international media after posting the financials on the Tadawul exchange in Riyadh where its shares are listed — the first time Aramco has staged a press conference for financial journalists since becoming a public company in the record-breaking initial public offering in December.

On Monday, he will answer questions from the world’s investment experts on vital issues such as the future dividend policy, capital expenditure plans, and how Aramco can thrive in the “new normal” of relatively low oil prices.

Both encounters promise to be eventful after a transformational first half of 2020 that has changed many of the basic assumptions of the oil industry. One industry expert said the period was “the eye of the storm” for the oil industry.

With the oil price about $20 per barrel lower than at the start of the year, some European energy giants are reinventing themselves as champions of a new environmentally aware era, cutting investment in crude exploration and writing down the value of their oil assets.

In the US, the shale revolution has ground to a halt as companies struggle under the new financial regime of $40 a barrel. Some have gone out of business, weighed down by debts and heavy financing costs.

Aramco is subject to those same financial pressures. JP Morgan, the giant US investment bank, estimates that Aramco’s operating income will be down by 64 per cent this year, with a similar fall in earnings for shareholders.

Another big US financial institution, Bank of America, also calculates that many of the key financial metrics will be significantly lower.

But both banks, in pre-results research notes, say that Aramco has advantages lacking among its peer group of independent oil companies in the US and Europe.

“While the results will be understandably weak, we believe that Aramco’s advantages such as low cost of production, long reserve lives and free cash flow generation in a lower oil price environment come to the forefront as industry metrics deteriorate rapidly amid the oil price collapse,” BoA said.

JPM analyst Christyan Malek reiterated the firm’s “overweight” recommendation for Aramco shares — advising investors to buy the stock — highlighting the strength of Aramco’s energy and petrochemicals portfolio, its financial strengths, and the advantage of its low-cost profile to win it increasing market share from rivals.

Accoding to Malek, the “key strategic focus points” of the meetings with journalists and analysts will be the “reiteration” of Aramco’s commitment to a total dividend payout of $75 billion this year, Nasser’s insights on the strength of the global recovery in oil demand, and an update on plans for capital expenditure, slated at around $25-$30 billion for this year.

BoA also highlighted Aramco’s strengths in a fast-changing global market. “Aramco dwarfs its oil and gas peers both by the sheer size of its production and lowest global extraction cost structure. Aramco’s financials also were ahead of such stock market champions as Google, Apple and Amazon,” the firm said.

The second quarter of 2020 was “the eye of the storm”, the bank said. “The second quarter will be a tough one for Aramco as we expect earnings to decline by 60 percent year-on-year. The decline will be mainly driven by oil price collapse, exacerbated by lower official selling prices in April and May,” it added.

Malek agreed. “The second quarter will be a transitory quarter of tough macro-economics, lower crude production at 9.3 million barrels per day, widened realization discounts and rising gearing,” he said.

Both investment houses also expected an impact on Aramco’s financial position from the $69 billion acquisition of SABIC earlier this year.

But they also believe there could be more value to be had from holding Aramco shares, which traded at SR32.95 on the Tadawul last week. BoA set a target price of SR34, while JPM said the shares could reach SR36.