Publication
Saudi Aramco’s Initial Public Offering: Over or underpriced?
| Summary: | The integrated Oil and Gas (O&G) industry is one of the most valuable industries in the world and has, over the years, been subject to great fluctuations in the market although visibly correlated to the overall GDP evolution. Members of the Organization of the Petroleum Exporting Countries (OPEC) are responsible for ca. 44% of the worldwide oil production and detain control over 81.5% of the world’s proved oil reserves – This means that the countries can easily manipulate the O&G prices by agreeing to cut down or accelerate production. Saudi Aramco is the Saudi Arabian national oil company and not only is the world’s leading oil supplier but it is also the most profitable and has access to one of the largest proven oil and gas reserves that secure production for at least 52 years being therefore the leader of OPEC. At the end of 2019, the Kingdom of Saudi Arabia has decided to list 1.5% of Aramco’s shares in the local stock exchange which turned into the largest IPO ever. This equity research aimed to evaluate the company using different valuation methods and compare the results with the initial share price offered in the IPO (USD 8.53). The results obtained in the valuation of the company point out towards an overpriced scenario which did not impact the success of the IPO likely due to the limited investment opportunities from Saudi Arabia but also the company’s very solid profile. |
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| Main Authors: | Rente, Carolina Mateus |
| Subject: | Corporate finance Avaliação -- Evaluation Initial Public Offering Finanças da empresa Oferta Pública Inicial |
| Year: | 2021 |
| Country: | Portugal |
| Document type: | master thesis |
| Access type: | open access |
| Associated institution: | ISCTE |
| Language: | English |
| Origin: | Repositório ISCTE |
| Summary: | The integrated Oil and Gas (O&G) industry is one of the most valuable industries in the world and has, over the years, been subject to great fluctuations in the market although visibly correlated to the overall GDP evolution. Members of the Organization of the Petroleum Exporting Countries (OPEC) are responsible for ca. 44% of the worldwide oil production and detain control over 81.5% of the world’s proved oil reserves – This means that the countries can easily manipulate the O&G prices by agreeing to cut down or accelerate production. Saudi Aramco is the Saudi Arabian national oil company and not only is the world’s leading oil supplier but it is also the most profitable and has access to one of the largest proven oil and gas reserves that secure production for at least 52 years being therefore the leader of OPEC. At the end of 2019, the Kingdom of Saudi Arabia has decided to list 1.5% of Aramco’s shares in the local stock exchange which turned into the largest IPO ever. This equity research aimed to evaluate the company using different valuation methods and compare the results with the initial share price offered in the IPO (USD 8.53). The results obtained in the valuation of the company point out towards an overpriced scenario which did not impact the success of the IPO likely due to the limited investment opportunities from Saudi Arabia but also the company’s very solid profile. |
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