Saudi Aramco prospectus flags risks, gives few details on IPO size

By Saeed Azhar, Hadeel Al Sayegh, Aziz El Yaakoubi and Maher Chmaytelli

DUBAI (Reuters) - Saudi state oil giant Aramco will sell 0.5% of its shares to individual retail investors and the government will have a lockup period of a year on further share sales after the initial public offering, its prospectus said on Saturday.

The more than 600-page prospectus did not include details of how much of the company would be floated in total or of any commitments from anchor investors.

Sources have said the company could sell 1%-2% on the Saudi stock market in what could be the world's largest listing.

Aramco fired the starting gun on the initial public offering (IPO) on Nov. 3 after a series of false starts. Crown Prince Mohammed bin Salman is seeking to raise billions of dollars to diversify the Saudi economy away from oil by investing in non-energy industries.

Among the risks highlighted in the prospectus were the potential for terrorist attacks and the potential for encountering anti-trust legislation, as well as the right of the Saudi government to decide maximum crude output and direct Aramco to undertake projects outside its core business.

Aramco may also change its dividend policy without prior notice to its minority shareholders, it said.

Aramco's oil facilities were targeted on Sept. 14 in unprecedented attacks that temporarily shut 5.7 million barrels per day (bpd) of output - more than 5% of global oil supply.

LOCKUP PERIOD

The prospectus said the government will have a "statutory lockup period" for disposing of any shares after the listing for six months, and a contractual lockup period for twelve months.

Aramco cannot list additional shares for a period of six months after trading starts, and will also be restricted from issuing additional shares for twelve months.

Bankers have told the Saudi government that investors will likely value the company at around $1.5 trillion, below the $2 trillion valuation touted by Prince Mohammed when he first floated the idea of an IPO nearly four years ago.

Initial hopes for a 5% IPO on domestic and international bourses were dashed last year when the process was halted amid debate over where to list Aramco overseas.

Aramco said the timetable was delayed because it began a process to acquire a 70% stake in petrochemicals maker Saudi Basic Industries Corp <2010.SE>.

The prospectus said Goldman Sachs was named as stabilising agent for the deal.

Analysts from banks working on the Riyadh bourse have projected a wide valuation range between $1.2 trillion to $2.3 trillion.

At the top valuation of $2 billion, Aramco could potentially raise $40 billion, topping the record-breaking $25 billion raised by Chinese e-commerce giant Alibaba in 2014.

The valuation would be almost twice that of Microsoft , currently the world's most valuable listed company, and seven times that of Exxon Mobil Corp , the biggest listed oil major by market capitalisation.

(additional reporting by Marwa Rashad in Riyadh and Rania El Gamal in Dubai; Editing by Sonya Hepinstall)

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