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Saudi Aramco IPO proposal opens new prospects for Saudi economy

Part of government’s plans to push non-oil revenues to more than $100 billion within five years

Saudi Arabia’s plans to list shares in Saudi Aramco, the world’s most valuable company, would open new prospects for the Saudi economy and come as part with the Kingdom’s approach to privatise assets in the wake of the steep decline in oil prices.

On Friday, Saudi Aramco said in a statement that the Kingdom, the world’s largest oil producer, was looking at various options, including the listing of “an appropriate percentage of the company’s shares and/or the listing of a bundle its downstream subsidiaries”.

The plan is part of a number of measures the government plans to take to push non-oil revenues to more than $100 billion within five years, according to a report by the London-based Al Sharq al Awsat newspaper.

The Saudi government expects its revenues in 2016 to touch $137bn, 90 per cent of which comes from oil returns. Regarding the plans to list Aramco in the share market, the report indicates that five per cent of the company’s shares is equal to $181.5bn.

This massive figure will push up the capital value of the market, will eventually boost the Kingdom’s competitiveness and attract more foreign capital. The current market capitalisation of the Saudi stock exchange amounts to a staggering $580bn.

Offering five per cent of the giant oil company’s share will send the local stock exchange value up by more than 31 per cent. It could be one of the largest IPOs in history, the report indicates.

($1 = AED3.67, at the time of publishing)