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Saudi Aramco Set For Historic IPO

Saudi aramco is the largest company of oil and gas. Company stated that their revenue goes around 13,3 trillion per day. The market players and investor are waiting for Saudi Aramco to “Go Public”. Their IPO is predicted to be the largest and highest in value ever throughout history. The valuation stock of Saudi Aramco almost reach 2 trillion and it’s bigger 29% than valuation stock of Apple. Management of Aramco aims that IPO will be done by next year. But, for several reasons the IPO of Saudi Aramco will be held until 2020 or 2021.

IPO has to happen anytime soon to prevent the decrease in the number of willing investors. Their willingness tend to fluctuate as the world is trying to pursue a net zero emissions by 2050. This sustainability movement will bring questions about how valuable those reserves are. Three years after Saudi Crown Prince Mohammed bin Salman suggested a stock market listing, climate change and new green technologies are pushing away several investors, particularly in Europe and the USA, from the oil and gas sector. Despite the decreasing number of investors, Aramco still argues that oil and gas will continue being at the heart of the energy mix for decades. Moreover, Aramco stated that renewables and nuclear cannot meet rising global demand, and that its crude production has lower greenhouse gas emissions than its rivals. "Saudi Aramco is a really interesting test as to whether the market is getting serious about pricing in energy transition risk," said Natasha Landell-Mills, in charge of integrating environmental, social and governance (ESG) considerations into investing at London-based asset manager Sarasin & Partners.

A growing number of investors across the world has begun to consider ESG risk into their decision-making. This would cause the to stop investing in Aramco. Some investors exclude Aramco on principle because of its carbon output, while others would be prepared to buy if the price is cheap enough to cover the perceived ESG risk - especially given oil companies often pay healthy dividends. Aramco would be the world’s largest public company, valued at $1.5 trillion. If it were included in major equity indices it would automatically be bought by passive investment funds that track them, regardless of their ESG credentials.


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