About Saudi Aramco
The official and national petroleum and natural gas company in Saudi Arabia, Saudi Aramco has been in the news recently for its IPO aiming for a staggering valuation of $1.71 trillion! Being one of the most profitable companies in the world, it has access to the second largest crude oil reserves in the world. By the first half of this year, the company reported a net income of 46.9 billion dollars. But, things may change! How? Let’s see.
About Saudi Aramco’s IPO
Saudi Aramco has announced to go public on the 17th of November 2019 and its initial public offering is considered to be the largest IPO in the world so far as its valuation seems to be more than the individual valuation of Apple, Microsoft and Amazon!
The launch of IPO was planned 3 years back but due to some hindrance, it got delayed but now it is set to go public.
Saudi Aramco, is the world’s largest company in integrated oil and gas and was up till now fully owned by the Government of Saudi Arabia. It is now going public and will be listed on the Main Market of TADAWUL which is the local stock exchange in Saudi Arabia. The company is set to sell only 1.5 percent of its shares on the local stock exchange.
Saudi Aramco’s IPO will not be listed on any western markets such as the New York Stock Exchange or the London Stock Exchange as was expected earlier.
The most important things you must not miss is that the offering date for IPO is 17th Number 2019 and closing date is 4th December 2019.
According Aljazeera News , the IPO price range as set for the listing will be valuing Saudi Aramco at $1.7 trillion which is below the $2 trillion targeted by the Saudi government but it is still considered to be the world’s biggest initial public offering to date.
The Key Question: Is Saudi Aramco Shariah Compliant?
The answer is YES, Saudi Aramco is Shariah compliant
The company has been examined by the internal research team of Islamicly on the basis of sector checks and financial checks. The company has passed both the checks and hence Saudi Aramco seems to be Shariah compliant for Islamic or Shariah sensitive investors. Aramco is engaged in operating as an oil exploration company. The Company focuses on hydrocarbons exploration, production, refining, distribution, and shipping, as well as provides crude oil marketing services. The business of the company is not opposed to the Shariah Principles. The revenue from Non-Permissible areas is less than 1% of total revenue. Thus, the sector of the company is compliant with Shariah Standards. As for the financials, the below is our findings: (All figures in millions of SAR for Year ended 30th June 2019)
| Particulars | Amount in SAR | Remarks |
|---|---|---|
| Market Cap | 6412500 | Estimated |
| Total Debt | 172879 | – |
| Islamic Debts | 19692 | – |
| Adjusted Debts | 153187 | – |
| LC1 Ratio | 2.39% | Within limits (the threshold is 33%) |
| Cash | 193677 | – |
| CC2 Ratio | 3.02% | Within limits (the threshold is 33%) |
| Total AR | 176485 | – |
| CC1 Ratio | 2.75% | Within limits (the threshold is 49%) |
Since all the Ratio are within the limit/threshold, the stock passes the accounting ratios.
Source:
All the above Shariah screening information is based on the company website and the IPO prospectus.
Conclusion
Given the above information, we believe Saudi Aramco is a Shariah compliant company as per the Shariah screening Criteria.
Can you find the sharia status of Saudi Aramco on Islamicly App?
The answer is YES
On our Islamicly App, we try to assist all the Shariah sensitive investors to keep their investments compliant by giving them a handy user friendly app to identify and track 30,000+ Shariah compliant stocks globally! Once the Saudi Aramco IPO is listed on Tadawul for trading, the same will get listed on Islamicly App as well, where you can track Aramco’s Sharia status and compliance. Keep visiting this place for more interesting facts and updates related to Shariah Compliant investments.
