Saudi Arabia plans to sell up to one-half of 1 percent of its oil company, Aramco, to individual investors, according to a prospectus released Saturday.
Aramco is the world's largest oil producer, pumping 10 percent of global supply, and its most profitable.
Saudi Aramco recorded a net income of $68.2 billion in the first nine months compared with $83.1 billion a year ago, the company's revenue slipped to $217 billion from $233 billion.
The valuation would be nearly twice that of Microsoft, now the world's most valuable listed company, and seven times that of Exxon Mobil, the biggest listed oil major by market capitalisation.
The offering for institutional investors will begin on November 17 and end on December 4, while retail investors will be able to bid for the shares from November 17 to November 28, the prospectus said. It will close for individual investors on November 28 and for institutional investors on December 4.
Japanese investors will probably steer clear of Aramco's IPO despite the fact that Saudi Arabia holds a significant share of Japan's crude oil imports. The company reiterated plans to pay out an annual dividend of at least $75 billion starting in 2020 and signaled that increases as well as special dividends could follow over time.
Meanwhile, adding that Japanese would unlikely to invest on Saudi Aramco IPO, JXTG Holdings' President, Tsutomu Sugimori said in an earnings' briefing on Friday (November 8th), "Japanese companies have stakeholders and they need good reasons to explain to shareholders why they would make such hefty investments and we need to do strict due diligence".
However, crude prices remain about $20 a barrel lower than what the government wants.
Bankers have told the Saudi government that investors will likely value the company at around $1.5 trillion, below the $2 trillion valuation touted by Prince Mohammed when he first floated the idea of an IPO almost four years ago.
The Kingdom's government aims to show investors why it believes the Saudi Arabian Oil Co., known as Aramco, should be valued above its oil and gas peers.
An attack on two key Aramco processing sites in September, which Saudi Arabia has blamed on its regional foe Iran, highlighted how the company's stability and security is directly linked to that of its owners - the Saudi government and its ruling family.
Sources have said the company could sell 1%-2% on the Saudi stock market.
The prospectus noted that the Saudi government ultimately decides the country's level of crude oil production.
Aramco's income also depends on the price of oil which has fluctuated sharply since mid-2014 from a monthly average of $112 a barrel in June 2014 to a monthly average of $31.9 a barrel in January 2016.