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Saudi Aramco bankers woo investors with $100bn dividend

Edmund Heaphy
·Finance and news reporter
A picture taken on November 3, 2019 shows a sign of Saudi Aramco's initial public offering (IPO) during a press conference by the state company in the eastern Saudi Arabian region of Dhahran. - Saudi Aramco confirmed it planned to list on the Riyadh stock exchange, describing it as a "significant milestone" in the history of the energy giant. (Photo by - / AFP) (Photo by -/AFP via Getty Images)
Aramco launched its much-awaited IPO this week. Photo: AFP via Getty Images

Bankers assisting Saudi Aramco with its long-awaited IPO have reportedly told investors that they could receive an annual dividend of more than $100bn if they invest in the company.

According to the Financial Times, Bank of America informed investors that payouts to shareholders could go “above and beyond the minimum dividend pledge” of $75bn over the course of the next five years.

The report is reflective of the messaging by Saudi officials, who are hoping that the company can garner a massive $2tn valuation.

Analysts and bankers alike have been skeptical that the oil giant could reach such a valuation, but Bank of America is said to value the company between $1.2tn and $2.3tn.

Analysts at Goldman Sachs, which is also advising the company, have suggested a range of between $1.6tn and $2.3tn.

The additional dividend payout would be contingent on oil reaching $70 a barrel, up from its current $60 range. That would give the company an extra $18bn in free cashflow, and allow it to push the total dividend paid out to shareholders to over $100bn, according to the Financial Times.

Oil companies are known for their huge dividends. Royal Dutch Shell is currently the world’s biggest dividend payer, and handed out $16bn in 2018.

Saudi Aramco this week launched its long-awaited IPO. It will list on the local Saudi stock exchange from next month.

The proposed listing was first mooted around three years ago by Saudi Crown Prince Mohammed bin Salman.

But the plan has progressed in fits and starts since then, largely because the prince was not confident that the IPO could achieve his desired $2tn valuation.

If that valuation is reached, however, if would allow him to commit around $100bn to projects in the country, according to reports.