It’s official: Saudi Aramco’s IPO is now underway, with the Saudi Capital Market Authority officially approving the share sale yesterday. Aramco Chairman Yasir Al-Rumayyan said at a presser yesterday that Aramco’s valuation would be determined during the investor roadshow and bookbuilding process, Bloomberg reports — par for the course. The listing will be limited to Tadawul for now, with plans for a listing in New York or London shelved for the time being, Al-Rumayyan said. Aramco will release an IPO prospectus on 9 November, added CEO Amin Nasser.

As far as we know, this is still the working time frame:

• Sunday, 17 November: Offering is priced.
• Wednesday, 4 December: Subscription period opens.
• Wednesday, 11 December: First day of trading.

You can check out Aramco’s intention to float (pdf)here on the oil giant’s website, which makes clear the number of shares on offer (widely expected to be a stake of 1-2%) won’t be made clear until the end of the bookbuilding process.

Aramco is about two Apples big. It turned in a bottom line of USD 111 bn in 2018 — i-device maker Apple, by comparison, turned in just under USD 60 bn in net income the same year.

MbS isn’t going to get his USD 2 tn valuation: The kingdom is ready to accept a USD 1.6-1.8 tn valuation to ensure the IPO is a success, people briefed on the matter have said. Valuation has been the big sticking point since the idea of the IPO was first raised three years ago, with Crown Prince Mohammed bin Salman targeting a USD 2 tn valuation, to which international investors responded with skepticism.

But some think it should be even lower: Some banks working on the IPO have suggested that the company may be valued even at below USD 1.6 tn, according to Bloomberg. Bank of America said its valuation reached as low as USD 1.22 tn and as high at USD 2.27 tn. HSBC, meanwhile, put the valuation at between USD 1.59 tn and USD 2.1 tn, while BNP Paribas said the company was worth exactly USD 1.42 tn.

There’s a raft of incentives designed to entice investors: Aramco will pay a tax rate of 20% on its domestic downstream business starting next year — a significant drop from current rates of 50-80%. The move is, however, contingent on consolidating the business under a separate, wholly-owned subsidiary by the end of 2024. Aramco’s board has also confirmed that it will pay USD 75 bn in dividends next year, as well as any potential special dividends — and could even raise this to USD 80 bn. If the company is valued at USD 1.8 tn this would mean a yield of 4.4%, which is high, but still lower than the 5% Exxon investors get.

Saudi retail investors will be able to receive one bonus share for every 10 allotted if they hold their shares for 180 days continuously from the first day of trading and listing on the Tadawul. (Though that generosity will apparently be capped at a maximum of 100 bonus shares.) Saudi banks are also reportedly being nudged to give extra leverage to retail investors who want to load up on Aramco shares.

Saudi stocks plummeted in response to the news that Aramco is coming to market, with the Tadawul All Share Index falling as much as 2.4% as investors rolled up their sleeves in preparation for the oil giant’s listing. “As Aramco will become the main constituent in indexes, the other names will definitely witness a sell-off somehow,” said Monsef Morsy, head of financial analysis at CI Capital in Cairo, Bloomberg reports.

Advisors: JPMorgan Chase, Morgan Stanley, Bank of America Merrill Lynch, Goldman Sachs Group, Credit Suisse Group, Citigroup, HSBC, Saudi Arabia’s National Commercial Bank, and Saudi Arabia’s Samba Financial Group, were all given the mandate for the IPO. Our friends at EFG Hermes are doing joint bookrunner duties.