This is really not the time I'd be investing that heavily in Aramco. 30 Years ago, certainly, now... not so much.
30 years ago you would have needed a blue water navy and nuclear weapons.
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Saudi Aramco Plans World's Biggest IPO
31–40 of 103 posts
Re: Saudi Aramco Plans World's Biggest IPO
#32$2trillion would be 2.5x the next largest sovereign fund (Norway). That is enormous.
Re: Saudi Aramco Plans World's Biggest IPO
#33The company is valued at $2 trillion, the value of the IPO is expected to be 5% of that. Title seems misleading...
isn't the valuation based on:
(1.00 / (percent sold off)) * (amount the chunk was sold for)
so 1/.05 = 20, and 20 * 100 billion = 2 trillion?
Re: Saudi Aramco Plans World's Biggest IPO
#34I'm curious about their long-term outlook. My understanding is that OPEC counties are currently desperate enough for money that they can't agree to limit output, thereby forcing the price further down. Anyone have better insight here?
I've heard two narratives, that being one of them. The other is that they're keeping output artificially high to lower the price of oil in hopes of "pricing out" alternative sources like shale.
Re: Saudi Aramco Plans World's Biggest IPO
#35If the Saudi government thought that the company was a good investment, they would invest in it themselves and reap all the rewards, even if it meant they had to print currency to do so. In other words, they'd continue doing what they've done all along.
Instead this seems like an "exit" event. A way to sell at the top and use the funds from the greater fools for other means.
Re: Saudi Aramco Plans World's Biggest IPO
#36If it were possible to get in short on this (it's usually not, right after an IPO), that would be the best investment decision anyone's ever made. $2 trillion is ridiculous. Remember when PetroChina hit $1 trillion market cap in 2007, and it was supposed to be a huge milestone for publicly-traded state oil firms? Now they're at a little over a tenth of that. Every reason to expect that the same thing will happen here…
PetroChina's valuation in 2007 has very little to do with Aramco pricing its future IPO. That said, you can just go short oil in general, if oil demand is lagging Aramco will be worth a lot less than $2t.
Re: Saudi Aramco Plans World's Biggest IPO
#37Earlier quoted context omitted.
A is not difficult, and B is also won't be difficult as it will list on the London Stock Exchange or one in New York
It's not that you can't buy shares. It's that ownership doesn't give you any influence over the thing. Look at Yahoo's troubles with Alibaba.
Influence seems theoretical anyway due to the enormous size of the company.
How much would you need to buy of a $2 trillion company to get a board seat? 10% might not be enough even in an ordinary public company, and that's $200 billion in this case...
Re: Saudi Aramco Plans World's Biggest IPO
#38The company is valued at $2 trillion, the value of the IPO is expected to be 5% of that. Title seems misleading...
Yes, and also rewritten in a way that breaks the HN guidelines. We've replaced it with a subtitle from the article.
(Submitted title was 'Saudi Aramco Announces Largest IPO in history valued at $2 trillion'.)
Re: Saudi Aramco Plans World's Biggest IPO
#39If it were possible to get in short on this (it's usually not, right after an IPO), that would be the best investment decision anyone's ever made. $2 trillion is ridiculous. Remember when PetroChina hit $1 trillion market cap in 2007, and it was supposed to be a huge milestone for publicly-traded state oil firms? Now they're at a little over a tenth of that. Every reason to expect that the same thing will happen here…
> that would be the best investment decision anyone's ever made
Oh now, the best investment decision anyone has ever made, was Masayoshi Son buying a third of Alibaba for $30 million or so. I don't think shorting Aramco is going to get you a ~2,500 fold return in 14 years.
Re: Saudi Aramco Plans World's Biggest IPO
#40Earlier quoted context omitted.
The article states that Saudi Aramco controls ~20% of the world's oil supply. The $18 trillion valuation of the global oil industry that you offered would imply a $3.6 trillion valuation for Saudi Aramco. Obviously there are many nuances to this, but $2 trillion is not unreasonable superficially. It's important to note that state owned oil companies tend to trade at lower market caps after IPO for a variety of reason…
>Saudi crude accounts for about 1 out of every 9 barrels of global production.
Yes, but they have very cheap production costs which makes their oil more profitable than the average barrel. They have loads of it still in the ground. And finally they also refine and make other petrochemicals. It's quite a valuable firm.