Riyadh – Mubasher: The Saudi government is on the verge of implementing the initial public offering (IPO) of the Saudi Arabian Oil Co. on the stock markets through converting the state-owned crude producer into Joint-stock Company with SAR 60 billion, as of January.

The Saudi Stock Exchange (Tadawul) is expected to have a part of the IPO, which will withdraw liquidity from the bourse, analysts and economic experts told Mubasher.

Aramco CEO Amin Nasser previously stated that the firm’s IPO is expected to occur in the second quarter of 2018.

Speeding up Aramco's IPO came in line with the Saudi plans to put economic reforms into effect in a bid to diversify the economy revenues and wean it off hydrocarbon receipts, said Al Safwa Mubasher’s CEO Ehab Rashad.

The value of Aramco’s shares will be equal about 25% - 30% of Tadawul’s stocks’ value, Rashad added, forecasting that Tadawul’s trading volume to rise after Aramco’s IPO.

Listing Aramco under dual-listing system is one of the options and the largest international crude producer is expected to collect $100 billion from the IPO.

EFG Hermes’ previous survey indicated that the oil firm’s IPO would amount between $1 trillion and $1.5 trillion.

Aramco’s IPO will be the largest and will withdraw liquidity from the Saudi stock market, said Mohammed Almaymony, an analyst and member in the International Union For The Financial Analysts (IUFA).

Almaymony projected that part of Aramco’s IPO will be implemented on Tadawul in line with adding the Saudi bourse under the global indices which would attract further investments.

Aramco’s IPO is expected to be covered five times, as it represents a major investment opportunity. 

The requested turnover of the IPO is large and it will impact the bourse if the company is not floated on a slew of bourses, market analyst Mohammed Ashemimry said.

The stock will be offered subject to the government's pricing, it might be offered at SAR 37.5 per share ($10 per share), Ashemimry added.

If the firm sells 5% stake on the stock markets, there will be 10 billion shares multiplied in SAR 37.5, hence the IPO will raise SAR 375 billion ($100 billion).

If the offering will be implemented on Tadawul, the step will be good for the GCC bourses as it will draw liquidity to the region from the large investors, especially institutions, said economic expert Aly Alhamody.