Sat. Dec 7th, 2019

Aramco, about to close the subscription between success and uncertainty



Saudi oil company Aramco closes on Wednesday a process of subscription of shares that has run between the success of the response in regional investors and individuals in Saudi Arabia and the uncertainty over the lack of clear interest from institutional clients in other areas of the world.

The operation of public sale of shares (opv) of the company with the most benefits in the world began on November 17 for individual and institutional investors, with an expectation of sale of subscriptions worth 25.6 billion dollars.

Aramco offered 0.5% of its shares to private clients – only Saudi by decision of the company – and 1% for institutional investors.

Until Tuesday night, at 24 hours to close, the oil company had received institutional subscriptions worth 50.4 billion dollars, while that of private investors ended last Thursday with sales of 12.6 billion dollars, far exceeding the margins marked.

Behind the success in the institutional part, the answer must be sought from countries such as Kuwait and United Arab Emirates (UAE), which, according to local press versions, would have signed 1,000 million and 1,500 million dollars, respectively.

However, many see in this response more a gesture of solidarity and good intentions than an investment decision.

But there is more. Aramco had initially aspired to a $ 100,000 million subscription on an estimate of the company's value exceeding $ 2 billion.

Finally, at the last minute and before leaving with its offer, the company reduced the expectation of subscriptions to 25.6 billion dollars on an estimate of value of the oil company to 1.7 billion. These objectives have been far exceeded and the company can now consider the operation to be successful.

The data is, in any case, still uncertain. Investors have not publicly announced the operations, and Samba, the Saudi consultancy that runs the entire subscription process, has not given details about subscribers.

"It seems that Aramco will achieve its goal for the opv, but the process has lowered expectations," Robert Mogielnicki, a researcher at the Arabian Gulf State Institute in Washington, told Efe.

It remains to be seen also the profile of the first buyers of titles.

In Mogielnicki's opinion, the long-term investor is more important to Aramco than the buyers of the opv.

"Short-term investors trying to sell their shares at the first sign of trouble don't help Aramco," he said.

For Tyler B. Parker, of the Gulf State Institute, “investors from the United States, Europe and Japan have raised objections about the transparency of the Aramco balance sheet,” and Riyadh is suffering to find a space for opv in the global markets of Actions.

The context has not been the most favorable for opv. Increasing concern about the stability of oil production hits the market and Aramco faces regional insecurity, price fluctuation, reduction in demand for crude oil and a hostile environment amid policies against climate change.

Along with all this, the shadow of human rights abuses with the scandal over the murder last year of journalist Jamal Khashoggi, the unpopular war of Yemen or the arrests of activists have not played in favor of the image of Saudi Arabia .

In addition, the OPV has arrived just two months after the Houthi rebel attacks on Saudi oil facilities.

Beyond the responses of international investors, opv money is necessary for the kingdom to begin its process of economic diversification.

Mogielnicki believes that the Vision 2030 project to diversify the monodependent oil economy will make Aramco "a global industrial conglomerate"

"Saudi officials expect to go beyond the Aramco opv and make cost-effective and concrete progress in strategic development initiatives," said Mogielnicki.

Omnia al Desoukie

. (tagsToTranslate) Aramco (t) point (t) close (t) subscription (t) uncertainty



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