Luberef IPO: Saudi Aramco’s refining unit may raise as much as $1.32bn

Company's offering includes a 29.7% stake sale and listing on the Tadawul exchange

In November 2022, FTSE Russell updated the investability weightings of Saudi Tadawul Group, the holding company that owns and operates the kingdom's stock exchange, on its indices that include the FTSE All-World Index, the FTSE Global Mid Cap Index and the FTSE Emerging Index. AFP

A view of the exchange board at the Stock Exchange Market (Tadawul) bourse in Riyadh displaying Aramco shares. AFP

An investor looks at a screen of asset prices at the Tadawul exchange in Saudi Arabia. AFP

A man walks past the Tadawul sign in Saudi Arabia. Reuters

Middle East IPOs have raised about $21 billion in 2022. AFP

Investors are seen at the Tadawul stock exchange in Saudi Arabia. AP

Saudi Aramco Base Oil Company (Luberef), the refining unit of oil major Saudi Aramco, may raise as much as 4.95 billion riyals ($1.32 billion) from its initial public offering, as the world’s biggest crude producer seeks to list some of its subsidiaries.

Luberef will sell more than 50 million shares, or about 29.7 per cent of the company's issued share capital, and set the offering share price between 91 and 99 riyals per share, it said in a statement on Sunday.

The final offer price will be determined through a book-building process and is expected to be announced on December 11, it said.

The subscription period for individual investors will begin after the determination of the final price and the offering period will be for five days, starting on December 14 until December 18. A maximum of 12.5 million shares, or 25 per cent of the total share offering, will be allocated to individual investors.

Luberef is selling existing shares owned by private equity company Jadwa Investment. It will list on the main market of Saudi Arabia's Tadawul stock exchange.

Saudi Aramco owns 70 per cent of Luberef and Jadwa owns the remaining 30 per cent, which it acquired in 2007 from Exxon Mobil.

Aramco will not sell any of its shares in the offering and will continue to own 70 per cent of Luberef’s share capital after the offering. No date has been set yet for shares to begin trading on the Tadawul exchange.

Luberef's IPO plans come amid a bumper year for company listings in the Gulf and Mena, despite declines in global markets, with Saudi Arabia and the UAE making up the majority of new listings amid high oil prices.

Middle East IPOs have raised more than $19 billion this year, the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.

Last month, Americana, the largest quick-service restaurant operator in the Mena region, raised $1.8 billion from its IPO, paving the way for its listing on Saudi Arabia's Tadawul and the UAE's Abu Dhabi Securities Exchange, the Arab world's two largest stock markets.

Americana is Saudi Arabia's largest IPO this year and the first company to be dually listed in the kingdom and the UAE.

Established in 1976, Luberef currently operates two production facilities located on the west coast of the kingdom in Yanbu and Jeddah with a combined capacity to produce 1.3 million metric tonnes per year of base oils, according to its website.

The Aramco unit makes base oils used in lubricants for motor vehicles, ships and industrial machinery. Base oils are used across various sectors, where hydraulic, turbine and transmission fluids are required for production and manufacturing machinery, such as in the steel industry, food production, textiles and clothing.

Luberef’s products are sold mainly in the company’s key end markets including Saudi Arabia, other countries across the Middle East, North Africa and India, it said. Its products are also sold across Asia, the Americas and Europe.

SNB Capital, HSBC, Citigroup and Morgan Stanley are acting as joint financial advisors, bookrunners, global coordinators and underwriters. In addition, SNB Capital is also acting as lead manager on the IPO.