Saudi Aramco refiner Luberef’s IPO to raise up to $1.32bn

The Riyadh initial public offering of Saudi Aramco Base Oil Co., a refining unit of the state-owned oil producer, could raise as much as SAR4.95bn ($1.32bn) in the Middle East’s latest listing this year.

Local private equity firm Jadwa Investment is selling 50 million shares in Luberef, as the company is known, for SAR91 to SAR99 apiece, according to a statement. That will value the refiner at as much as SAR16.7bn.

#Luberef, Saudi Aramco Base Oil Company, announces the price range in relation to the IPO, as well as the commencement of the institutional book-building period. The price range for the offering has been set between SAR 91 and SAR 99 per share.https://t.co/SkIWYw98nM#LuberefIPO pic.twitter.com/KxjQechVpJ

— Saudi Aramco Base Oil Company – Luberef (@AramcoLUBEREF) December 4, 2022

Luberef, with operations in the industrial cities Jeddah and Yanbu, is 70 per cent owned by Saudi Aramco, with the rest held by Jadwa, which is selling the entire stake it acquired in 2007 from Exxon Mobil. Institutional investors can bid for shares until December 9, while retail investors can subscribe from December 14-18.

The final price is expected to be announced December 11.

Luberef becomes the latest billion-dollar plus IPO in the Gulf, which has emerged as a bright spot for listings against a gloomy macroeconomic backdrop elsewhere dominated by inflation fears and rising interest rates. High oil prices have benefited Gulf economies, markets and companies’ balance sheets, helping drive a flurry of listings.

IPOs in the region have raised $19.2bn so far in 2022, an amount that would be a record for a year if it weren’t for 2019, when Aramco had its $29.4bn IPO.

However, while investor demand for new listings has held up, the after-market performance has been weaker as regional equity indexes have come off earlier highs, tracking a decline in oil.

Luberef operates two production facilities on Saudi Arabia’s west coast, producing various base oils and byproducts including asphalt, marine heavy fuel oil and naphtha. They are mainly sold in the Middle East, North Africa and India, and more broadly across Asia, the Americas and Europe. The company has said demand for base oils globally is expected to grow by about five million metric tonnes between 2022 and 2030.

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