Saudi Aramco’s record IPO starts Nov 17, prospectus says

Saudi Aramco executives dismissed concerns about peaking global oil demand as recently as April this year but views are changing ahead of what could be the biggest-ever share sale

"The biggest issue with Aramco is that everything about this company is controlled by the Saudi royal family - shareholder opinions, your board votes, none of that makes any difference", Pavel Molchanov from Raymond James told CNBC.

"In terms of scale and quality of Aramco's assets, they've got the world's best, bar none", said Dwight Anderson, the founder of hedge fund Ospraie Management. If the government sells two per cent of Aramco shares, the retail offering could account for 25 per cent of the deal size at the top valuation of Sh200m trillion ($2 trillion).

"If Aramco decides to significantly lower its overambitious valuation expectations and float the company on investor-friendly terms, these will be considered a sign of strength and wisdom rather than weakness", said Slava Breusov, a senior analyst with the emerging and frontier equities team at AllianceBernstein, which manages nearly $600 billion.

Saudi Aramco had previously said that crucial details for the listing on the Tadawul exchange would be revealed after the book-building period.

Low production costs are one of the main reasons Aramco is considered an attractive investment opportunity for energy investors, along with its massive reserves.

After years of delays and false starts, Aramco officials last week announced a share sale on the Riyadh stock market for the world's most profitable company, which pumps 10 percent of global oil supply.

The world's most productive organization has distributed more insights regarding its arranged securities exchange buoyancy.

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The oil and gas company netted profits of US$111 billion (NZ$175b) a year ago, more than Apple, Royal Dutch Shell and Exxon Mobil combined.

Additional risks on the company's finances include climate change concerns leading to a reduction of global demand for hydrocarbons, political and social instability in the Middle East and terrorism and armed conflict, according to the document. Back in April, Aramco gave no indication that a peak in oil demand was on the horizon. Even so, the kingdom has long maintained it will be the last producer standing because of its low costs.

The prospectus said that among the risks for investors were the potential for terrorist attacks and the potential for encountering antitrust legislation, as well as the right of the Saudi government to decide maximum crude output and direct Aramco to undertake projects outside its core business.

The document listed a number of risks for prospective investors to consider, including how the company's cash flow is significantly impacted by global crude oil supply and demand and the price at which it is able to sell crude oil.

Saudi Aramco said that it will be compensated for such work.

The company said it had hired a host of worldwide banking giants including Citibank, Credit Suisse and HSBC as financial advisors and book-runners. The company's directors believe that the data provided by the industry consultant are "reliable". In August it reported $47bn of net profits for the first half of the year - more than double Apple's haul over the same period.

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