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Saudi Aramco's Luberef Set for IPO

Aramco's base oil subsidiary, Luberef, has won approval from the Kingdom's stock market regulator, Capital Market Authority (CMA), to launch its IPO. (Asharq Al-Awsat)
Aramco's base oil subsidiary, Luberef, has won approval from the Kingdom's stock market regulator, Capital Market Authority (CMA), to launch its IPO. (Asharq Al-Awsat)
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Saudi Aramco's Luberef Set for IPO

Aramco's base oil subsidiary, Luberef, has won approval from the Kingdom's stock market regulator, Capital Market Authority (CMA), to launch its IPO. (Asharq Al-Awsat)
Aramco's base oil subsidiary, Luberef, has won approval from the Kingdom's stock market regulator, Capital Market Authority (CMA), to launch its IPO. (Asharq Al-Awsat)

Saudi Al-Ahli Tadawul announced a potential initial public offering (IPO) for one of Saudi Aramco's subsidiaries.

Ahli Capital announced its capacity as the underwriting manager, financial advisor, institutional underwriting book manager, international coordinator, and underwriter of Citigroup Saudi Arabia, HSBC Saudi Arabia, and Morgan Stanley Saudi Arabia as the financial advisers, global coordinators, and underwriters of public offerings.

The company said that Aramco's base oil subsidiary, Luberef, has won approval from the Kingdom's stock market regulator, Capital Market Authority (CMA), to launch its IPO and list its shares on the primary market of the Saudi Stock Exchange (Tadawul).

Luberef is one of the world's largest producers of base oils and produces one of every eight barrels of base oils globally, with a total capacity to produce 1.3 metric tons per year of base oils.

Luberef will sell 50 million shares, or 29.7 percent of the company's issued share capital, through the IPO on the Tadawul stock exchange, the company said in a statement on Sunday.

The final pricing of the offer shares will be determined at the end of the book-building period, it stated.

The company obtained Tadawul's approval for its request to list its shares in the main market on November 24 and also received the approval of the Capital Market Authority for its bid to offer 50 million ordinary shares.

The shares are open for subscription by institutional, individual, and qualified foreign investors.

Luberef pointed out that the shares will be offered for subscription to individual and institutional investors, including institutional investors outside the US, in offshore transactions following Regulation S under the US Securities Act of 1933, as amended (the Securities Act).

A maximum of 12.5 million shares, or 25 percent of the total share offering, will be allocated to individual investors, the company said.

Meanwhile, the main Saudi stock index fell 142.29 points to close at 10796.46 points, with transactions worth SR2 billion.

About 74 million shares were traded through more than 241,000 deals, in which 33 companies recorded an increase in value, while 173 companies closed in decline.

The Saudi parallel market (Nomu) plunged 300.87 points to close at 18866.13 points, with a value of SR68 million, and the number of shares reached more than 392,000 shares shared by 1157 transactions.

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Expert: Türkiye Anti-inflation Steps Don’t Go Far Enough

People shop at a bazaar in Istanbul. Reuters
People shop at a bazaar in Istanbul. Reuters
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Expert: Türkiye Anti-inflation Steps Don’t Go Far Enough

People shop at a bazaar in Istanbul. Reuters
People shop at a bazaar in Istanbul. Reuters

Although Turkish inflation slowed in September, it is still raging out of control with the government avoiding difficult decisions that could help tackle it, experts told AFP.

Türkiye has experienced spiraling inflation the past two years, peaking at an annual rate of 85.5 percent in October 2022 and 75.45 percent in May.

The government claims it slowed to 49.4 percent in September.

But the figures are disputed by the ENAG group of independent economists who estimate that year-on-year inflation stood at 88.6 percent in September.

Finance Minister Mehmet Simsek has said Ankara was hoping to bring inflation down to 17.6 percent by the end of 2025 and to “single digits” by 2026.

And President Recep Tayyip Erdogan recently hailed Türkiye’s success in “starting the process of permanent disinflation.”

“The hard times are behind us,” he said.

But economists interviewed by AFP said the surge in consumer prices in Türkiye had become “chronic” and is being exacerbated by some government policies.

“The current drop is simply due to a base effect. The price rises over the course of a month is still high, at 2.97 percent across Türkiye and 3.9 percent in Istanbul.

“You can’t call this a success story,” said Mehmet Sisman, economics professor at Istanbul’s Marmara University.

Spurning conventional economic practice of raising interest rates to curb inflation, Erdogan has long defended a policy of lowering rates. That has sent the lira sliding, further fueling inflation.

But after his reelection in May 2023, he gave Türkiye’s Central Bank free rein to raise its main interest rate from 8.5 to 50 percent between June 2023 and March 2024.

The central bank’s rate remained unchanged in September for the sixth consecutive month.

“The fight against inflation revolves around the priorities of the financial sector. As a result, it is done indirectly and generates uncertainty,” explained Erinc Yeldan, economics professor at Kadir Has University in Istanbul.

But raising interest rates alone is not enough to steady inflation without addressing massive budget deficits, according to Yakup Kucukkale, an economics professor at Karadeniz Technical University.

He pointed to Türkiye’s record budget deficit of 129.6 billion lira (3.45 billion euros).

“Simsek says this is due to expenditure linked to the reconstruction in regions hit by the February 2023 earthquake,” he said of the disaster that killed more than 53,000 people.

“But the real black hole is due to the costly public-private partnership contracts,” he said, referring to infrastructure contracts which critics say are often awarded to firms close to Erdogan’s government.

Such contracts cover construction and management of everything from motorways and bridges to hospitals and airports, and are often accompanied by generous guarantees such as state compensation in the event they are underused.

“We should question these contracts, which are a burden on the budget because this compensation is indexed to the dollar or the euro,” said Kucukkale.

Anti-inflation measures also tend to impact low-income households at a time when the minimum wage hasn’t been raised since January, he said.

“But these people already have little purchasing power. To lower demand, such measures must target higher-income groups, but there is hardly anything affecting them,” he said.