Saudi Aramco converted into joint stock company ahead of planned IPO that may raise $100 billion. Hamad I Mohammed/Reuters
Saudi Aramco converted into joint stock company ahead of planned IPO that may raise $100 billion. Hamad I Mohammed/Reuters

Saudi Aramco becomes joint stock company as it heads towards IPO



Saudi Aramco, the world's biggest oil producer, transformed its legal structure into a joint-stock company this month signalling its seriousness to move ahead with its 5 per cent stake sale plan that may make it the world's largest publicly traded company. 

"This is one of the key steps they need to take to allow third party investors through the door and this is probably one of the most significant milestones when it comes to the actual IPO process," said Oliver Shutzmann, chief executive officer of Iridium, a Dubai investor relations firm. 

“This is one of the signals that they are probably on track to do this properly and from here onward they really have people’s attention.”

If Aramco sells a 5 per cent stake that is valued at US$100 billion, it would give the company a valuation of $2 trillion, making it more than twice as valuable than Apple, currently the world's largest publicly traded company at more than $900bn

Transforming Aramco into a joint stock company means that other investors can buy and sell shares of the company. 

The next step for the company would be to issue a prospectus, detailing where the initial public offering will be listed as well as the financial details of the sale, investor relations professionals and lawyers said. The company is said to be considering New York, London and Hong Kong for a dual listing as well as one on the Tadawul stock exchange in Saudi Arabia.

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“They will have to choose the listing venue before doing the real detailed prospectus because each jurisdiction will have its own different requirements for disclosure but they are all relatively high,” said Andrew Tarbuck, partner at Hogan Lovells, an international law firm. 

“Due diligence would have been the start of the process, then converting the company into a joint stock company, it will then be drafting your prospectus and getting that approved by authorities. Then you proceed to marketing.” 

The Middle East and North Africa region recorded five IPOs in the third quarter of 2017, up from a single listing in the same period a year earlier with more offerings expected this year thanks to the recovery in oil prices, according to consultancy EY.

The value of IPOs in the third quarter rose 20 per cent to $236.7 million from a year-earlier period, led by three offerings on the Saudi Stock Exchange or Tadawul, according to EY.

Privatisation lies at the heart of the economic overhaul of Saudi Arabia which still relies heavily on the sale of hydrocarbons for revenues. Riyadh is encouraging foreign investments in both government and private sector companies. The stake sale of Aramco is part of a wider series of measures the Saudi Arabian government is taking to shore up public finances in the wake of the 2014 oil price crash. Plans also include reducing energy subsidies and implementation of new taxes such as value added tax

Saudi Arabia stands to earn as much as 80bn Saudi riyals (Dh78.29bn) from non-oil revenues this year after the introduction of VAT, an expatriate worker tariff and the possible introduction of a levy on luxury goods, the investment lender Bank of America Merrill Lynch said last year.  

Analysts said the stake sale of Aramco may encourage other governments in the region to follow suit. Some, such as the gas station operator Adnoc Distribution in Abu Dhabi, have already sold shares to the public in recent months.

“There’s so much privatisation work that could kick start the region’s markets because there are so many government businesses or part-owned by the government,” Mr Tarbuck said. “It’s such a good opportunity to put these companies on the markets and boost the depth of the markets. I think the level of disclosure that is going to come out will encourage other governments to use it as a kickstart for privatising government related entities via public capital markets.”

Fitness problems in men's tennis

Andy Murray - hip

Novak Djokovic - elbow

Roger Federer - back

Stan Wawrinka - knee

Kei Nishikori - wrist

Marin Cilic - adductor

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Business Insights
  • As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses. 
  • SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income. 
  • Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
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Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
UAE SQUAD

Omar Abdulrahman (Al Hilal), Ali Khaseif, Ali Mabkhout, Salem Rashed, Khalifa Al Hammadi, Khalfan Mubarak, Zayed Al Ameri, Mohammed Al Attas (Al Jazira), Khalid Essa, Ahmed Barman, Ryan Yaslam, Bandar Al Ahbabi (Al Ain), Habib Fardan, Tariq Ahmed, Mohammed Al Akbari (Al Nasr), Ali Saleh, Ali Salmin (Al Wasl), Adel Al Hosani, Ali Hassan Saleh, Majed Suroor (Sharjah), Ahmed Khalil, Walid Abbas, Majed Hassan, Ismail Al Hammadi (Shabab Al Ahli), Hassan Al Muharrami, Fahad Al Dhahani (Bani Yas), Mohammed Al Shaker (Ajman)

The team

Photographer: Mateusz Stefanowski at Art Factory 
Videographer: Jear Valasquez 
Fashion director: Sarah Maisey
Make-up: Gulum Erzincan at Art Factory 
Model: Randa at Art Factory Videographer’s assistant: Zanong Magat 
Photographer’s assistant: Sophia Shlykova 
With thanks to Jubail Mangrove Park, Jubail Island, Abu Dhabi 

 
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Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Rating: 4/5
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Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4

Electoral College Victory

Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate. 

 

Popular Vote Tally

The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.

Company%20Profile
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MATCH INFO

Rajasthan Royals 158-8 (20 ovs)
Kings XI Punjab 143/7 (20 ovs)

Rajasthan Royals won by 15 runs

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Disclaimer

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Stars: Cate Blanchett, Kevin Kline, Lesley Manville 

Rating: 4/5

Movie: Saheb, Biwi aur Gangster 3

Producer: JAR Films

Director: Tigmanshu Dhulia

Cast: Sanjay Dutt, Jimmy Sheirgill, Mahie Gill, Chitrangda Singh, Kabir Bedi

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Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni

Director: Amith Krishnan

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Some of Darwish's last words

"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008

His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.

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Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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The Gentlemen

Director: Guy Ritchie

Stars: Colin Farrell, Hugh Grant 

Three out of five stars

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TO A LAND UNKNOWN

Director: Mahdi Fleifel

Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa

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