There’s even the usual scams: a columnist for Saudi newspaper Aleqtisadiya warned would-be investors in a tweet about falling for groups offering Aramco shares at a discount.
Abdullah AlZailaie, a 28-year-old doctor from Abha in the southwest of the country, said people are divided over the Aramco sale but he knows some who have even postponed home purchases just to invest. AlZailaie wants to spend 100,000 riyals ($26,600) on buying shares and if he can’t find the money he will borrow from a bank, many of which are expected to offer credit to boost liquidity for the sale.
“It will be a monumental event in the kingdom’s history and Saudi investors should take pride in the fact that they own shares in a global institution that has played a significant role in the kingdom's transformation,” said Abdullah AlGhamdi, 34, a legal adviser in Riyadh.
Such a glowing endorsement, however, is not shared by everyone. The IPO plan will still face significant hurdles, including the ability of the kingdom to achieve the $2 trillion valuation it’s been seeking for the company. Demand for the share sale would also likely be affected by lower oil prices as well as growing concerns among top institutional investors about pouring money into fossil-fuel companies that contribute to climate change.
In Riyadh, one Saudi businessman said there’s still some uncertainty over the financial allure to local investors even after the announcement of Aramco’s intention to pay out $75 billion in dividends next year. An investment adviser in Saudi Arabia said the giant valuation and low oil prices makes the offering unattractive. Both spoke on condition of anonymity.
Saudi businessman Essam Al Zamil was jailed in September 2017 after months of sharing sometimes critical analysis of the government’s economic policies on social media, including the Aramco IPO. In 2016, he posted a series of tweets, later deleted, in which he said it would be impossible for Aramco’s valuation to reach $2-3 trillion without including “even the rights to the oil under the ground.” He opposed that idea and argued that the oil was “the property of the people.”
Jamil Farsi, another Saudi businessman, was also arrested in 2017, several months after he had made a public plea not to sell Aramco in an IPO at a Jeddah Chamber of Commerce meeting. Charges against both Al Zamil and Farsi were not publicly disclosed, so it’s unclear if the arrests were related to their stance on the IPO.
Saudi Aramco’s board is expected to meet with its advisers around Oct. 17, according to people familiar with the preparations. Then there will be a countrywide advertising blitz to drum up investment from Saudi citizens, who have shown before they have the resources to make an IPO a success. Plans are going “smoothly and quickly,” Aramco Chairman Yasir Al-Rumayyan said on Monday.
When National Commercial Bank was sold in 2014, the transaction was restricted to only local retail investors. It still managed to attract 311 billion riyals of bids, making it 23 times oversubscribed, partly because banks offered loans to take part in the IPO. The subscription for the NCB offering would be enough to cover the entire Aramco IPO twice, even at a $2 trillion valuation.
“When you talk about Aramco, you talk about almost the main source of revenue for the kingdom of Saudi Arabia,” said Eid Al Shamri, chief executive of investment bank Ithraa Capital. “It’s as if you’re buying the main revenue of Saudi, and in my opinion the $2 trillion is a cheap one.”