International Finance
Oil & Gas

Experts: $2 tn valuation possible for Aramco

Aramco valuation
High demand, reducing production and incentivising shares could drive share prices up

Although many analysts called Aramco’s target to reach the coveted $2 trillion valuation a bit far stretched, now experts say Aramco could achieve its target after all.

Experts believe high demand, reduced production and the decision to incentivise those who hold their shares for about six months, are going to drive share prices up and exceed targets.

However, the experts did not mention the time frame within which Aramco would be able to achieve the $2 trillion valuation.

Salmaan Khawaja, partner and transactions advisory at Grant Thornton UAE, there are a lot of investors who want to buy Aramco’s shares and the fact that its shares were 4.6 times oversubscribed is evidence.

He told the media, “One could, therefore, conclude that there is an expectation for more demand for the Aramco shares and this will likely result in the share price going north in its early days of trading.”

After a successful IPO, Aramco will start trading its shares on the Tadawul this week with a 10 percent daily price fluctuation limit.

Prior to Aramco’s IPO, the Saudi Crown Prince Mohammed bin Salman heavily targeted the coveted $2 trillion valuation for the state-owned oil giant, but many argued that it was unrealistic. Experts predicted the company will be valued at around $1.5 trillion instead.

Aramco, which is the world’s most profitable company finally decided to settle in for a valuation between $1.6 trillion and $1.8 trillion.

According to HSBC, a London-based multinational investment bank, Aramco is worth between $1.59 trillion and $2.1 trillion. French bank BNP Paribas, on the other hand, expects Aramco to be valued at more than $1.4 trillion.

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