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Armco`s IPO

Release date : 2018/02/05

Beyond Apple to become the world’s largest company by market capitalization! Saudi Aramco soars 1.2 trillion on the first day of listing, or IPO in China.

On December 11, the world’s most profitable company, Saudi Aramco, opened its daily limit on the first day of its IPO, reaching 10%. The company’s market value reached about 1.87 trillion US dollars, equivalent to 13.16 trillion yuan, that is, the market value soared 1.2 trillion a day, surpassing Apple and Microsoft, becoming the world’s largest company.

Saudi Aramco’s “difficult” road to listing

The market value of 1.87 trillion US dollars, plus a 10% daily limit, will surge to a market value of 2 trillion US dollars.

Data show that in 2018, the total US GDP exceeded US $ 20 trillion for the first time, ranking first. Japan’s GDP in 2018 was about 4.4 trillion US dollars, Germany was 3.7 trillion US dollars, and the United Kingdom was 3.4 trillion US dollars. In other words, the market value of Saudi Aramco is equivalent to half of Germany’s GDP.

According to the understanding of the Aid Securities Futures Research Department, Saudi Aramco is considered to be one of the most valuable companies in the world.In 2018, Saudi Aramco generated a net income of US $ 111 billion, which is equivalent to 2 times that of Apple and 10 times that of Amazon. At the same time, It is also the sum of the top five oil companies in the world-Exxon Mobil, Royal Dutch Shell, British Petroleum, Dorda and Chevron.

For a giant company such as Saudi Aramco, how to value it has become a problem, and it has also become the crux of its IPO. The largest IPO in history has been brewing for three years since it was proposed, and it was once shelved.

In 2014, international oil prices fell into a downturn, which caused Saudi Arabia’s oil revenue to account for 80% of its gross national income. In 2016, in order to get rid of the long-term economic development structure that relied on oil revenue, Crown Prince Salman put forward the “2030 Vision” plan, through the establishment of a US $ 2 trillion giant sovereign wealth fund, the sale of national oil company equity, reduction of oil subsidies and expansion of investment With a view to achieving economic structural transformation by 2020.

Against this background, Saudi Aramco announced its plan to go public in 2018, raising $ 2 trillion through partial privatization to provide funding for economic diversification in the new energy era. But Western Investment Bank believes that Saudi Aramco’s valuation premium is obvious, the two sides are deadlocked, and the IPO plan has been postponed.

For the past two years, Saudi Aramco has been demonstrating its determination to expand its business, and has made great progress.

In March this year, Saudi Aramco announced the acquisition of 70% of Saudi Basic Industries; in April, Saudi Aramco issued bonds for the first time in the international market to test the water; in August, India’s Reliance Industry Group announced that Saudi Aramco will acquire Reliance’s refining and petrochemical business. 20% of the shares; In September, Falih resigned as chairman of the board of directors, Rumei Yan took over, and the director restarted the IPO; in December, Saudi Aramco officially announced the IPO pricing.

Data show that Saudi Aramco’s listing also broke the record for the world’s largest IPO, raising US $ 25.6 billion, which surpassed Alibaba’s US $ 25 billion in capital raised when it was listed on the NYSE in 2014. The company previously said on Friday that it might trigger a “green shoe” mechanism to sell more shares, and expected total financing to reach $ 29.4 billion.

The listing of Saudi Aramco is part of Saudi Arabia ’s Crown Prince Mohammed ’s “2030 Vision” plan. The funds raised from the listing will be injected into large-scale projects and non-energy industries such as tourism and entertainment to get rid of Saudi Arabia ’s dependence on oil and diversify its economy.

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