Saudi’s PetroRabigh floats 25% stake

 

PetroRabigh, a $10 billion (Dh36.5 billion) joint venture between Saudi Aramco and Japan's Sumitomo Chemicals, will sell 219 million shares, representing 25 per cent of its capital, to Saudi nationals at SR21 each, lead manager HSBC Saudi Arabia said.

 

Some 40 firms plan to sell shares to the public in Saudi Arabia in 2008, in offerings worth up to $8 billion (Dh29.2 billion), or twice last year's total, Hasan al-Jabri, head of the investment banking arm of state-owned National Commercial Bank (NCB) said in November.

 

NCB is Saudi Arabia's largest bank by assets.

 

The share price offers a 50 per cent discount on the project's cost of $10 billion, according to Reuters calculations.

 

Sumitomo and Saudi state-owned Aramco, the world's largest oil company by output, agreed in 2005 to develop the petrochemical complex through a 50-50 joint venture that would upgrade a refinery at Rabigh on the Red Sea coast.

 

Aramco said last year the IPO would take place after operations began in 2008. Sumitomo was against selling shares before production started, scuppering an initial IPO plan in 2006.

 

Aramco officials argued that an early share sale would raise cash and help offset rising project costs. Soaring material and construction prices have more than doubled the project's cost from an initial estimate of $4.3 billion (Dh15.7 billion).

 

The joint venture is expected to start commercial operations in the fourth quarter of 2008.

 

The complex will produce 18.4 million tonnes of oil products, 1.3 million tonnes of ethylene and 900,000 tonnes of propylene a year.

 

Sumitomo Chemicals and Aramco will each retain a 37.5 per cent stake after the IPO, Sumitomo Chemicals said in a statement in Tokyo.

 

All Saudi banks will take subscriptions for the IPO from January 5 to 12, HSBC Saudi Arabia CEO Timothy Gray said.

 

Institutional investors will get between 25 and 50 per cent of the offered shares depending on appetite for the retail tranche, Gray said. Up to 1.78 million shares will be earmarked for employees, he added.

 

The minimum subscription is for 10 shares and the maximum is for one million shares. (Reuters)