Saudi Aramco IPO Explained – Things you Should Know About World’s biggest IPO | Groww


Saudi Aramco Maybe you haven’t heard the name of this company before If you haven’t heard of them, I will tell you some very interesting things about them today This is a company, which is the biggest in the world And in the oil sector, It is a company, in the oil sector, which supplies 10% of the total crude oil to this sector You must have heard this new a few days ago That in the coming time, this company is going to launch its IPO And this IPO Will become one of the biggest IPO’s in the world I, Jagdeep Singh, welcome you to the Groww channel Today we are going to discuss about Saudi aramco And we will talk about Saudi aramco, which in the recent past Has shown a lot of interest in India And is going to buy a really big stake in a really big company in India The first time Saudi aramco came in the news was in 2017 When the news first came that Saudi aramco is going to launch its IPO And at that time, Saudi aramco’s valuation came out be 2 trillion dollars And they said that they will dilute 5% of their stake For 100 billion dollars Now you must be thinking that I told you at the beginning of this video that this company is going to launch its IPO And now I told you that the company was going to launch its IPO in 2017 So why didn’t the company launch its IPO during that time And what was the reason because of which they have to defer their IPO launch So, if you don’t know about the process of IPO, I will tell you a little about it When a company thinks of taking money from the people, they launch their IPO And while launching their IPO, they call investment bankers And they tell them their company’s valuation And because of the valuation they will sell a certain percentage stake of the company And they should get a certain amount of money And after the the investment bankers Launch that IPO So the same thing happened in the case of Saudi aramco But Saudi aramco said that their valuation should be 2 trillion dollars But the investment bankers said that they won’t get that much valuation in the market Because of which Saudi aramco had to defer their IPO Now, you must be thinking that Saudi aramco asked for 2 trillion dollars but the investment bankers did not give that amount There must be some reason behind that Because Saudi aramco’s entire business revolves around oil And if I talk about 2017, then at one time, the oil prices had gone down Because of which there was a direct effect on Saudi aramco And because of that their valuation had become less And there was an effect on their IPO And they had to defer their IPO launch Everything I spoke about till now was their first IPO That what the valuation of their first IPO and why wasn’t it launched But why are they launching their IPO now And you must be interested in knowing what their valuation is now If I talk about their current valuation so that is between 1.6-1.7 trillion dollars And they have said that they are going to dilute only 1.7% stake Because of which they will get an amount of around 25 billion Now you must be thinking what the urgency for Saudi aramco was, that the IPO that they deferred Because of the valuation Now on an average, they are launching their IPO on the same valuation Whenever a company launches their IPO, their shares start trading in the market And whenever a share enters the market, their price goes up and down Depending upon the price the market gives them And Saudi aramco wants their share to enter the market And for people to trade on it And after this, their valuation will increase They want to prove their worth by entering the market Apart from this, Saudi Arabia is a country completely dependent on oil And for a long time, it had been trying to diversify itself in different things Because of which, the money From aramco’s IPO, they are going to use it in different businesses They are going to try to diversify themselves So, that, from an oil dependent country From an oil dependent company It can diversify itself in different sectors Now let us talk about Saudi aramco’s net profit How much profit do they make in one year If I talk about the financial year 2018, then their net profit was 118 billion If I talk about the half yearly profit in 2019 So, their half yearly profit was 47 billion So you can imagine how much their net profit amount has increased Now you must be thinking that apart from Saudi aramco there must be a lot of companies in the world Whose profit is very high in one year I will show you the list About which company makes how much profit in one year As you can see on my screen, if I talk about most profitable companies in the world in 2018, The first name is of Saudi aramco Saudi aramco’s net profit in 2018 was 111 billion After this comes Apple Whose net profit was 59 billion If I talk about the difference between the first and second company, there is a 50% difference Which is a very big difference Now you must be thinking what are the companies apart from Saudi aramco, whose market capitalisation is very high If I talk about those two companies, then the company that comes after Saudi aramco is Apple If I talk about Apple’s market cap then it is 1.04 trillion And after this is Microsoft Whose market cap is 1.02 trillion So you can imagine that the two biggest companies in the world Are much below Saudi aramco Only time will tell how Saudi aramco will perform when it trades in exchange Let us talk about the question that I brought up in the beginning That Saudi aramco is showing great interest in an Indian company And they have said that in the coming time, they have thought of buying a 20-25% stake in the company So the name of that company is Reliance industries And Saudi aramco has said that they will buy a 20-25% stake of that company In the coming time Mainly from their refining and petrochemical business And Reliance will use that money to reduce their debt Because Reliance has said that in 2020 They want to become a debt free company Now, friends, I will end this video with a question for you What do you think the difference on Reliance’s share will be because of this deal? And apart from this Out of all the companies in the world, which is your favourite? Let us know in the comments below Friends, if you haven’t yet subscribed to this channel, then please subscribe And if you like this video, press that like button and share it with your friends Happy investing!

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