Saudi valuation of Aramco inflated: poll

DUBAI, March 6, 2017 – Saudi Arabia’s projections for a USD 2-trillion or higher valuation of crown jewel Saudi Aramco in next year’s IPO may be unrealistic, an EFG Hermes survey of more than 500 international fund managers suggested on Monday.

Only 24% of the responders valued Aramco at over USD 1.5 trillion, according to figures published by Reuters, while the majority – 39% – said its market value would be between USD 1 trillion and USD 1.5 trillion. Another 36% saw Aramco’s market capitalisation at under USD 1 trillion.

The IPO faces significant challenges, including the 85% tax rate and 20% royalty rate the firm currently pays to the government, and the poll comes as Saudi Arabia is reportedly considering two major options to restructure Aramco ahead of the IPO into a specialised international oil company or as a global industrial conglomerate.

In recent weeks, speculations about the IPO have grown, with some analysts expecting it to be postponed until 2019 or later.

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