(Adds Saudi Aramco's comment)
By Rania El Gamal and Saeed Azhar
DUBAI, Nov 1 (Reuters) - Saudi Aramco officials and advisers
are holding last-minute meetings with investors in an attempt to
achieve as close to a $2 trillion valuation as possible ahead of
an expected listing launch on Sunday, according to three
sources.
Failure to reach the coveted target would cause a dilemma
for Saudi Crown Prince Mohammed bin Salman - swallow the bitter
pill of going ahead at a lower valuation or postpone the initial
public offering (IPO) once again.
The Aramco officials and advisers are meeting institutional
investors around the world, said the three people familiar with
the matter. Chief executive Amin Nasser has been meeting
investors in New York and London this week, they added.
A final meeting by the government to decide whether to go
ahead should take place later on Friday, one of the sources
said.
The main sticking point remains the $2 trillion valuation,
which has often been considered too ambitious by advisers and
some insiders, according to the three people. A valuation closer
to $1.5 trillion is more likely, with wealthy Saudi families the
main investors in the IPO, they said.
"Saudi Aramco does not comment on rumours or speculations,"
the company said in an emailed response to Reuters' queries
about the meetings and IPO launch date. Aramco added it was
ready for the IPO, and that the timing would depend on market
conditions.
Saudi energy minister Prince Abdulaziz said on Wednesday
that it would be a Saudi decision, specifically by Crown Prince
Mohammed.
A weak outlook for oil prices, against a gloomy global
economic picture and increasing climate change activism, could
dampen investor interest, particularly in the Western world.
"Aramco's officials and advisers are still on the road,"
said one of the sources, a major institutional investor.
Saudi Arabia is separately still holding
government-to-government meetings to attract investment from
sovereign wealth funds, the investor added.
The state-owned oil major has also approached governments in
the Gulf and Asia, including China, to try and secure the bulk
of the investment from countries on friendly terms with Saudi
Arabia, as the reception elsewhere has been cooler, sources have
previously said.
DIVIDEND PAYOUT
The listing is the centrepiece of the crown prince's plan to
shake up the Saudi economy and diversify away from oil. But
there have been various delays since the 2016 announcement. A
launch is now expected on Nov. 3, sources have previously said.
Aramco has said it will pay a base dividend of $75 billion,
which at $2 trillion would mean a dividend yield of 3.75 %,
below those already offered by competitors like Exxon Mobil Corp
and Royal Dutch Shell.
Shell's dividend yield is over 6% and Exxon's over 5%,
according to Refinitiv data.
Oil majors have been raising payouts to shareholders over
the past years to counter rising pressure from climate activism
on investors to dump oil stocks and help the world switch to
cleaner fuels, such as wind and solar.
To achieve $2 trillion, in the largest IPO in history,
Riyadh needs the initial listing of a 1%-2% stake on the Saudi
market to raise at least $20 billion-$40 billion.
Prince Mohammed wants to eventually list a total of 5% of
the company. An international sale is expected to follow the
domestic IPO.
The close relationship between the new Aramco chairman
Yasser al-Rumayyan, who also heads the PIF, the kingdom’s
sovereign wealth fund, with the crown prince was a governance
concern of some investors, the sources said.
The PIF (Public Investment Fund) will use the proceeds of
the Aramco IPO sale to deliver on the prince's ambitious
domestic and economic reforms.
(Additional reporting by Hadeel Al Sayegh and Marwa Rashad;
Writing by Clara Denina; Editing by Pravin Char)
