4 ms·

IPO is meant to raise capital (for growth) and to provide liquidity to existing shareholders. Saudi Aramco needs neither of these. Be very wary of investing i

by acchow 8y ago

IPO is meant to raise capital (for growth) and to provide liquidity to existing shareholders. Saudi Aramco needs neither of these. Be very wary of investing in this IPO. The end of oil is coming - even Saudi Aramco knows it.

Iv 8y ago
One shareholder (Prince Mohammad bin Salman) needs 500B to finance his project of starting a city from scratch to compete with Dubai. (project Neom if you want to google it). He also wants to feed some money in a tech investment fund (solar energy and AI). That's the main reason behind the IPO IMO. And shareholders would probably be more interested in the oldest reason to buy stocks: getting a share of the profits as dividends. If oil supply becomes insufficient before the Saudi reserves dry up, the prices will skyrocket and so will the profits. Sure, it won't last 100 years, but if you are looking to get dividends within 20 years, that's not necessarily a bad deal.
- itronitron 8y ago
  I would think, or at least hope, that 500B could buy peace in Yemen and that he could pick a city there to refurbish from scratch.
  - azernik 8y ago
    Probably can't. Saudi military strength in Yemen is not limited by budget, so doesn't help with a military solution. And the issues of control and religion and security over which the war is being fought can't really be made to go away with money, so wouldn't help too much with a political solution. In any case, building up a city in Yemen would not strengthen the Saudi state and MBS's personal political power in the way that a new and rich Saudi city would.
  - Iv 8y ago
    Well he wants a city populated by hipster close to a trade route and also to use it as a way to normalize relationship with Israel and "experiment" a non-sharia area in KSA. Such a project will require being careful about who gets there.
  - deleted 8y ago
    [deleted]
Latteland 8y ago
I kind of hate the oil industry because of damage to the world. I own an electric car. Even with those feelings, it's also very clear we'll continue to have massive profits for this industry during the next few decades. At least 5-10 years of current sized profits - because it will take a long time to make enough cheap evs and build infrastructure. Maybe not at that massive valuation of 2T though.
- beambot 8y ago
  Do you own any index funds (most of which have oil holdings)?
  - Latteland 8y ago
    I'm sure I do own some index funds that own big oil. I can still dislike the practices of a company that I own some of. I don't always have the possibility of constructing my own index funds separate from the opportunities that my company 401k offers.
ryanx435 8y ago
That may be true for companies, but not countries. Saudi aramco is doing an IPO to help fund their 2020 plan and to further diversify their economy and create ties with foreign economies. This is one of the best deals available
simula67 8y ago
Also in the past, the Saudi government has threatened to nationalize the then Arabian American Oil Co. (or Aramco) [1] company. At the time it was an American company and this forced the company to share profits with the kingdom. It will not be good if history repeats itself and government threatens to rob your property [1] https://en.wikipedia.org/wiki/Saudi_Aramco#History https://en.wikipedia.org/wiki/Saudi_Aramco#History

by acchow 8y ago

Iv 8y ago

One shareholder (Prince Mohammad bin Salman) needs 500B to finance his project of starting a city from scratch to compete with Dubai. (project Neom if you want to google it). He also wants to feed some money in a tech investment fund (solar energy and AI). That's the main reason behind the IPO IMO. And shareholders would probably be more interested in the oldest reason to buy stocks: getting a share of the profits as dividends. If oil supply becomes insufficient before the Saudi reserves dry up, the prices will skyrocket and so will the profits. Sure, it won't last 100 years, but if you are looking to get dividends within 20 years, that's not necessarily a bad deal.

itronitron 8y ago
I would think, or at least hope, that 500B could buy peace in Yemen and that he could pick a city there to refurbish from scratch.
- azernik 8y ago
  Probably can't. Saudi military strength in Yemen is not limited by budget, so doesn't help with a military solution. And the issues of control and religion and security over which the war is being fought can't really be made to go away with money, so wouldn't help too much with a political solution. In any case, building up a city in Yemen would not strengthen the Saudi state and MBS's personal political power in the way that a new and rich Saudi city would.
- Iv 8y ago
  Well he wants a city populated by hipster close to a trade route and also to use it as a way to normalize relationship with Israel and "experiment" a non-sharia area in KSA. Such a project will require being careful about who gets there.
- deleted 8y ago
  [deleted]

Latteland 8y ago

I kind of hate the oil industry because of damage to the world. I own an electric car. Even with those feelings, it's also very clear we'll continue to have massive profits for this industry during the next few decades. At least 5-10 years of current sized profits - because it will take a long time to make enough cheap evs and build infrastructure. Maybe not at that massive valuation of 2T though.

beambot 8y ago
Do you own any index funds (most of which have oil holdings)?
- Latteland 8y ago
  I'm sure I do own some index funds that own big oil. I can still dislike the practices of a company that I own some of. I don't always have the possibility of constructing my own index funds separate from the opportunities that my company 401k offers.

ryanx435 8y ago

That may be true for companies, but not countries. Saudi aramco is doing an IPO to help fund their 2020 plan and to further diversify their economy and create ties with foreign economies. This is one of the best deals available

simula67 8y ago

Also in the past, the Saudi government has threatened to nationalize the then Arabian American Oil Co. (or Aramco) [1] company. At the time it was an American company and this forced the company to share profits with the kingdom. It will not be good if history repeats itself and government threatens to rob your property [1] https://en.wikipedia.org/wiki/Saudi_Aramco#History https://en.wikipedia.org/wiki/Saudi_Aramco#History