Announcing the development on November 3, Saudi Aramco said that the offer period will run from November 17 to December 4, and the IPO would be priced on December 5.

The pricing was duly announced at the top of its indicative range, at SR32 ($8.53) per share. The total of $25.6 billion exceeds the $25 billion flotation of e-commerce colossus Alibaba in 2014, previously the biggest in history, but is nonetheless lower than some analysts had anticipated.

While there was some international interest in the offering, Saudi Aramco principally relied on domestic and regional investors.

The shares are expected to begin trading on the Tadawul as soon as December 11.

Aramco is seen as the most profitable company in the world by some distance. According to Fortune’s Global 500 2019 listing, the oil company announced profits of around $111 billion in 2018.

In recent months estimates of its total worth had varied from $1.2 trillion to over $2 trillion. This IPO gives it a market valuation of $1.7 trillion, significantly more than Apple, its nearest competitor.

Saudi Aramco says that it plans to pay shareholders annual aggregate cash dividends of at least $75 billion, on top of any special dividends, starting in 2020.

Investors eye oil prices and security

Analysts noted that Saudi Arabia had been hoping for higher and more stable oil prices in the run-up to the IPO.

Trade tensions between China and the US have held down prices of late, with another wave of tariffs, worth roughly $156 billion, expected to be announced by the US on December 15.

However, December also marks the start of one of the Organisation of the Petroleum Exporting Countries’ regular two-day meetings, at which production cuts were announced that should put renewed upward pressure on energy markets.

Another likely focus for investors is related to security, following September’s drone attacks on the Abqaiq oil facility and the Khurais oil field in Saudi Arabia, both of which are owned by Aramco.

Driving diversification

Saudi Arabia is one of the biggest producers and exporters of oil; it owns around 15 percent of the world’s proven oil reserves. Oil and gas account for half the country’s GDP and around 70 percent of its export earnings.

The public listing of Aramco forms part of Vision 2030, a socio-economic reform plan launched in April 2016 aimed at steering the Kingdom’s economy away from oil and towards sectors such as tourism and health care. Money raised from Aramco’s listing will be allocated to the country’s Public Investment Fund (PIF) which has been charged with spearheading many of the projects under Vision 2030.

The plan is also pushing for the privatisation of public services in areas such as transport, utilities and education, with securing more foreign direct investment (FDI) in Saudi Arabia a key dimension of the vision.

The Kingdom signed $15 billion in agreements in late October at the Future Investment Initiative conference, its annual investment forum, now in its third year. These deals spanned energy, transport and manufacturing, and are set to notably increase FDI inflows.

Also in late October, the Red Sea Development Company announced it is seeking a loan of more than SR10 billion ($2.7 billion) from four to five local banks to help finance new tourism projects, in addition to equity provided by the PIF.

The Red Sea Development Company’s plans include the creation of a special economic zone with its own regulatory framework and entry visas, designed to incentivise foreign players. It plans to complete the first phase of the project by 2022, at which point it hopes to attract 300,000 tourists a year.

The Red Sea Project is one of three major projects backed by the PIF, alongside the Qiddiya entertainment project and the $500 billion NEOM economic zone, all designed to boost tourism and entertainment earnings.

Saudi Arabia has similarly signed a series of deals to invest in other countries. During a visit from President Jair Bolsonaro at the end of October, the Kingdom announced that it will invest up to $10 billion in projects in Brazil.