The IPO the World has never seen
Everyone has heard of billion-dollar companies having IPOs. Investors could barely wait for some of those companies to hit the market. Others, they avoided tactfully. There is a new IPO in town that’s already making people sit up and take notice. The IPOwill take place in 2018. And it happens to involve the multi-trillion dollar oil company Saudi Aramco (Pending: ARMCO).
The Saudi Aramco IPO is so big that countries have already started bidding to host it. And not just any nations. Big name countries like Asian superpower China and Britain. The United States is hovering behind, but you can see that it’s interested. So what makes the Aramco IPO so special? Why is it the IPO the world has never seen? Let’s talk about that below.
It’s a lucrative deal
Saudi Aramco’s $2 trillion valuation is the biggest driver of the haggles to get it into the various stock markets. Some people argue that the valuation is unreasonable. These people say that most likely Aramco’s actual valuation stands at about $400 billion. The markets don’t care about that for now. After all, the chosen market will be making millions either way.
Should Aramco, for example, end up on the NYSE or the LSE, the 5% Aramco is offering will make its way into the American or British stock markets. That would mean a huge currency input increase for either country. It would also mean increased liquidity in that nation’s economy. More money in the economy would mean a stronger currency for the country. Given the current global market and economy, a strong currency is a great motivator for any country to fight for Aramco.
Before the IPO was officially confirmed, the Saudi Arabian Government lowered taxes on Aramco from 85% to just 50%. When converted into monies, that percentage drop translates into millions in tax exemption for the royal family-owned corporation.
Investors worldwide appreciate the significance of such tax deduction. An investor who just invested money to get his or her money back would get it sooner were it a smaller company. However, with equity in the company, an investor stands to gain whatever the investment amount a few times over through higher dividend checks. The lower taxes are guaranteed to bring investors to the table. That’s what’s making each world market is clamorfor the chance to broker the expected deals.
Control of the Global Oil Market
One thing all parties seem to agree on is that the opening up of Aramco to the public will have a global impact. As one of the largest oil suppliers on the world market and one of the most powerful players in OPEC, Saudi Aramco has a large hold on the oil and petroleum industry.
Any company with a stake in the firm will, therefore, have some say in Aramco’s oil production levels and by extension global oil prices Because oil energy runs almost all developed nations, great countries such as the US, Britain, and China stand to gain immense power by hosting the company on their markets or investing in the company.