Saudi Aramco unit Luberef gets regulatory nod for IPO

The Saudi Capital Markets Authority (CMA) has approved the application of the Saudi Aramco Base Oil Company, or Luberef, a refining arm of the state-owned oil and gas giant, to list 30% of its shares on the country’s stock exchange.

No date has yet been fixed for the initial public offering although the CMA approval will remain valid for six months.

Luberef is a joint venture between Saudi Aramco, which owns 70% of the company, and the Jadwa Industrial Investment Group, an investment bank which owns the remaining 30%. At present, Luberef operates and owns two refineries in Saudi Arabia.

Following the IPO, which could reportedly raise up to $1 billion, Jadwa is likely to get an exit from the refiner.

The CMA said in a statement that Luberef plans to sell 50,045,000 shares, representing 29.656% of its share capital. Luberef’s prospectus with details of the offering will be released at a later date, the regulator added.

The Gulf region in general and Saudi Arabia, in particular, has seen a slew of IPOs over the past year, as oil prices have remained high and as several state-owned behemoths as well as sovereign wealth funds look to diversify their holdings away from oil and gas and into other new-age economy businesses.

Three stock exchanges—the Saudi Tadawul, Abu Dhabi Securities Exchange and the Dubai Financial Market—have accounted for a bulk of the $16 billion that Gulf-based companies have raised via listings so far in 2022. This is half the amount that companies throughout Europe and the Middle East and North Africa (MENA) region have raised from IPOs this year.

But Aramco may not be done with listing just the refining arm. Its energy trading division, too, is expected to go public soon.

Aramco’s own 2019 IPO was the biggest ever the region has seen so far. The 1.5% share dilution had raised a whopping $26 billion for the Saudi government, and had valued the oil and gas company at a staggering $1.7 trillion.