Saudi Aramco’s prospectus details the world’s largest IPO

Saudi Aramco will sell up to 0.5% of its shares to individual investors in what could be the largest initial public offering in history.

Saudi Aramco to offer up to 0.5% of its shares to individual investors in the world’s largest IPO to commence on Nov. 17, Saudi Aramco’s prospectus reported.

Saudi Aramco has announced the launch of offering its shares for the first time ever on the Saudi Stock Exchange (Tadawul). Saudi Aramco to offer one billion shares to private investors in world’s biggest IPO, according to the prospectus.

According to the prospectus, book building for investing institutions will start on November 17 and end on December 4, and it will start on November 17 and end on November 28 for individual investors.

Aramco said it aims to sell a maximum of 0.5% of its shares to individual investors in the IPO.

The company’s shares amount to 200 billion shares with a capital of SAR60bn, without the face value.

The final price of the offering and the allocation of the final shares to institutions and individuals will be announced on December 5.

According to the company, the surplus, if any, will be refunded no later than December 12, with the number of shares offered and the final subscription price to be determined after the period of the book building.

The prospectus included the sale of a number of shares worth SAR3.75bn, or $1billion, based on the final offering price to the company for use as part of the employee shares program.

Subscription limits for individuals and institutions

The prospectus pointed out that there is no minimum or maximum number of shares that can be subscribed by institutions, while the minimum subscription for individuals is 10 shares and there is no maximum.

The IPO targets two tranches — the first tranche is for the investing institution; this segment includes the categories that are entitled to participate in the process of book building in accordance with the instructions of book building and shares allocating to IPOs issued by the Authority.

While the second tranche is for individual subscribers; this segment includes natural Saudi individuals, including divorced Saudi women or widows with minor children of a non-Saudi spouse, who are entitled to subscribe in their own name or the names of their minor children to their own benefit, provided that they provide proof that they are divorced or widows and proof of maternity for minor children, and any non-Saudi resident or natural citizen of the GCC who have a bank account with one of the recipients.

The final offering price

The final offering price will be the price at which the offering shares are allocated to all categories of subscribers.

Aramco said it would pay dividends to its shareholders in Saudi riyals, with the exception of the shareholder seller, i.e. the government, which will get its dues in US dollars.

The Offer Shares shall be entitled to their share of any dividends announced as of the date of the announcement of the final allocation of the Offer Shares to subscribed institutions and individual subscribers.

Every Saudi natural person, including a divorced or widowed Saudi woman, who has Saudi minors (eligible individual subscribers) who subscribes in the offering shares and maintains them for 180 days from the first commencement date of trading in the stock market (free maturity) continuously and uninterruptedly (eligible Shares) obtains one share (bonus share) for every ten subscription shares allocated to it, provided that the number of bonus shares granted and eligible for each eligible subscriber shall not exceed a maximum of 100 bonus shares.

The bonus shares will be granted and allocated by the seller shareholder of the shares it owns in the company. This grant does not entail the transfer of the related rights to the eligible individual subscriber only from the date of transfer to the investment portfolio.

Aramco IPO prospectus

Aramco’s prospectus marks an important milestone in deciding how much equity an individual should buy, which will be followed by several important steps.