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Give or take a trillion - Investors still in the dark on Saudi Aramco value

Saudi Aramco’s blockbuster listing remained shrouded in mystery on Monday, a day after the company finally announced its plans, with scant details disclosed and expert valuations varying wildly from around $1.2 to $2.3 trillion.

(Reuters) The state oil giant, the world’s most profitable company, fired the starting gun on a domestic initial public offering (IPO) on Sunday after a series of false starts that had kept the investment world guessing.


However potential investors, rattled by a damaging attack on Aramco’s facilities in September, were not given key details usually included in “intention to float” notices - such as how much of the company will be sold, and when the sale will happen.


Now fund managers are poring over bank research about the famously secretive company, but little certainty has been provided even by analysts from the Wall Street giants with roles in the IPO, five investment and banking sources told Reuters.


Crown Prince Mohammed bin Salman has said he wants a $2 trillion valuation, seeking to raise billions of dollars to diversify the Saudi economy away from oil by investing in non-energy industries.


That valuation figure is almost twice that of Microsoft MSFT.N, currently the world’s most valuable listed company and seven times that of Exxon Mobil Corp (XOM.N), the biggest listed oil major by market cap.


Analysts from banks working on the Riyadh bourse listing have met Aramco’s management in Dhahran over the past month to get more information on the company, but their valuations of the company still vary by around $1 trillion.


Bank of America Merrill Lynch has a range of $1.2 trillion to $2.3 trillion while EFG Hermes says $1.55 trillion to $2.1 trillion, according to two fund managers who have seen the reports.


Goldman Sachs - one of the IPO coordinators - has put the valuation between $1.6 trillion and $2.3 trillion, two separate sources said. Credit Suisse’s research offers a similarly wide range, one of the fund managers said.


A major factor in the broad spread is the various assumptions analysts are making for the future direction of oil prices, said a source familiar with the deal.


The banks were not immediately available for comment.


Sources have told Reuters that Aramco could offer 1%-2% of its shares, raising as much as $20 billion to $40 billion. A deal over $25 billion would top the record-breaking IPO of Chinese e-commerce giant Alibaba (BABA.N) in 2014.


Aramco Chairman Yasir al-Rumayyan said a decision on an international listing would be made in the future.


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