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As Oil Fortunes Sink, Saudi Arabia Considers IPO for Aramco

January 7, 2016 11:33 AM EST

After posting a record $98 billion deficit in 2015 amid sagging oil prices, Saudi Arabia is considering the unthinkable... an IPO of the massive state-owned oil company Saudi Aramco. Saudi Aramco is the world's largest oil producer and may very well be the world's most valuable company by a long shot.

News of a possible IPO came from The Economist, which cited deputy crown prince Muhammad bin Salman. Salman said a decision will be taken in the next few months. "Personally I'm enthusiastic about this step," he said. "I believe it is in the interest of the Saudi market, and it is in the interest of Aramco."

Saudi officials say the company is worth "trillions of dollars," which would make it worth at least double the market cap of the largest U.S. company by market cap, Apple (NASDAQ: AAPL), which has a valuation of around $555 billion. Meanwhile, U.S. oil giant Exxon Mobil (NYSE: XOM) has a market cap of about $324 billion.

Exact valuation figures for Saudi Aramco are hard to calculate given the secretiveness of the government on revenue and profit figures. However, a listing would make the oil giant more transparent.

Saudi Aramco may float 5% in an initial offering, according to market talk cited by The Economist.

With oil crashing below $35 per barrel, the fortunes of the country and the massive oil company have gone with it. Still, Salman said today his country is far from suffering an economic crisis. The country has also been taking measures to stem the bleeding. The country recently raised its subsidized prices on gas for citizens and today Salman said the country may impose a VAT tax by the end of this year.



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