Members of media chat before the start of a press conference by Aramco at the Plaza Conference Center in Dhahran, Saudi Arabia on November 3, 2019. Photo: VCG

 
Saudi Arabia on Sunday put a value of up to $1.71 trillion on energy giant Aramco in what could be the world's biggest initial public offering (IPO), but missed Crown Prince Mohammed bin Salman's initial target of $2 trillion.

Aramco said it would sell 1.5 percent of the company in a blockbuster IPO worth $24-25.6 billion, scaling down Saudi Arabia's initial plan to sell up to 5 percent of the firm.

"The base offer size will be 1.5 percent of the company's outstanding shares," the state-owned energy giant said as it began taking bids from investors in a price range of 30-32 Saudi riyals ($8-8.5) per share.

The much-delayed offering, a cornerstone of Prince Mohammed's ambitious plan to diversify the oil-reliant economy, rivals the world's biggest listing - the $25 billion float of Chinese retail giant Alibaba in 2014.

Aramco had initially been expected to list on two exchanges, with a first flotation of 2 percent on the kingdom's Tadawul bourse, followed by a further 3 percent on an overseas exchange.

But the firm has said there are no current plans for an international stock sale, indicating that the long-discussed goal has been shelved for the time being.

The IPO has been dogged by delays since the idea was first announced in 2016, with Prince Mohammed's desired valuation of $2 trillion meeting with scepticism from investors and analysts.

"[The] first impression is that [the] price is a sensible compromise and that it will sell," Tarek Fadlallah, CEO of the Middle East unit of Nomura Asset Management, said on Twitter.

If priced at the top end of the range, it could eclipse Alibaba to become the world's biggest IPO, Fadlallah added.

Saudi Arabia is pulling out all the stops to ensure the success of the IPO, a crucial part of de facto ruler Prince ­Mohammed's plan to wean the economy away from oil by pumping funds into megaprojects and non-energy industries. S&P Global Ratings said the stock market debut could enable the kingdom to strengthen its financial position. 

"If subsequently effectively deployed, the funds raised could be used to support longer-term economic growth in Saudi Arabia," it said.