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Saudi Aramco IPO: Company valued at up to $1.71 trillion, may top Alibaba’s 2014 record

The price range for Saudi Aramco shares published on Sunday ahead of an IPO indicates that the value of the oil giant is between $1.6 trillion to $1.7 trillion, which falls short of the initial $2 trillion target.

The indicative price range for about 3 billion shares that Saudi Aramco offers is between 30 riyals ($8) and 32 riyals ($8.53) per share. This would bring anywhere between $24 billion and 25.6 billion into its coffers, depending on the final price that is to be announced on December 5. Alibaba Group Holding Ltd. raised $25 billion in its 2014 IPO.

The range indicates an assessment of between $1.6 trillion and $1.71 trillion for Saudi Aramco. The value falls short of the $2 trillion figure floated by Crown Prince Mohammed bin Salman in 2016, when the IPO was first proposed.

The offering made at Tadawul, the national Saudi stock exchange, will allocate a third of the sold shares to Saudi citizens. The company is not planning to market the IPO abroad and counts on domestic and regional investors for subscription. Retail investors will have until November 28 to jump in, while institutional investors can subscribe as late as December 4.

The IPO is meant to raise money for the crown prince’s ambitious goal of diversifying Saudi economy away from oil export. Investors are likely to be reassured by Aramco’s status, as the world’s most profitable company that plans to distribute $75 billion in dividends next year, which is five times more than Apple.

Among the negative factors is a lack of financial and operational transparency that makes valuation harder, uncertainty over global demand for oil in upcoming years and regional tension, as indicated by a missile and drone attack on Aramco’s infrastructure in September.