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FILE PHOTO: The Saudi Aramco logo is pictured at the company's oil facility in Abqaiq, Saudi Arabia, October 12, 2019.

Maxim Shemetov/Reuters

Saudi state oil giant Aramco will sell 0.5 per cent of its shares to individual retail investors and the government will have a lockup period of a year on further share sales after the initial public offering (IPO), its prospectus said on Saturday.

The more-than-600-page prospectus did not include details of how much of the company would be floated in total or of any commitments from anchor investors.

Sources have said the company could sell 1-2 per cent on the Saudi stock market in what could be the world’s largest listing.

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Offering for the shares will begin on Nov. 17, the prospectus said.

Aramco fired the starting gun on the IPO on Nov. 3 after a series of false starts. Crown Prince Mohammed bin Salman is seeking to raise billions of dollars to diversify the Saudi economy away from oil by investing in non-energy industries.

Among the risks highlighted in the prospectus were the potential for terrorist attacks and the potential for encountering antitrust legislation, as well as the right of the Saudi government to decide maximum crude output and direct Aramco to undertake projects outside its core business.

Aramco may also change its dividend policy without prior notice to its minority shareholders, it said.

Aramco’s oil facilities were targeted on Sept. 14 in unprecedented attacks that temporarily shut down 5.7 million barrels per day (bpd) of output - more than 5 per cent of global oil supply.

The prospectus said the government will have a “statutory lock-up period” for disposing of any shares after the listing for six months, and a contractual lock-up period for 12 months.

Aramco cannot list additional shares for a period of six months after trading starts, and will also be restricted from issuing additional shares for 12 months.

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The offering for institutional investors will begin on Nov. 17 and end on Dec. 4, while retail investors will be able to bid for the shares from Nov. 17 to Nov. 28, the prospectus said.

Aramco has been in talks with Gulf and Asian sovereign wealth funds and wealthy Saudi individuals to secure top investors of the IPO, but no anchor investor has yet to formally agree to a deal.

The Russia-China Investment Fund is working to attract Chinese investors for Aramco’s planned IPO, the head of Russia’s RDIF sovereign wealth fund said on Thursday.

Bankers have told the Saudi government that investors will likely value the company at about US$1.5-trillion, below the US$2-trillion valuation touted by Prince Mohammed when he first floated the idea of an IPO nearly four years ago.

Initial hopes for a 5-per-cent IPO on domestic and international stock exchanges were dashed last year when the process was halted amid debate over where to list Aramco overseas.

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Aramco said the timetable was delayed because it began a process to acquire a 70-per-cent stake in petrochemicals maker Saudi Basic Industries Corp.

The prospectus said Goldman Sachs was named as stabilizing agent for the deal.

Analysts from banks working on the Riyadh stock market have projected a wide valuation range between US$1.2-trillion and US$2.3-trillion.

At the top valuation of US$2-tillion, Aramco could potentially raise US$40-billion, topping the record-breaking US$25-billion raised by Chinese e-commerce giant Alibaba in 2014.

The valuation would be almost twice that of Microsoft , currently the world’s most valuable listed company, and seven times that of Exxon Mobil Corp , the biggest listed oil major by market capitalization.

“Due to its size and likely free float, Aramco should be eligible for fast-track inclusion in both the FTSE and MSCI Emerging Market indices within 10 days of the IPO,” said Dominic Bokor-Ingram, senior portfolio manager, frontier markets for Fiera Capital (Europe).

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