Uncertainty Looms Over Saudi Aramco’s IPO

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

Following a series of false starts, Saudi Aramco is finally moving forward with its blockbuster initial public offering.

The world’s largest oil company announced its intention to float shares on the Tadawul exchange in Riyadh, following approval from the country’s regulators. Here’s what we know:

The company posted a $68 billion profit for the first nine months of this year, down 18% on the same period in 2018. Profit for the whole of last year was $111 billion.
It is expected to make its stock market debut early next month.

But other key metrics are still shrouded in secrecy:

It did not offer potential investors key details around net income figures or share how much of the company will be sold.
Saudi Aramco’s valuation is yet another giant question mark. Prince Mohammed has said it would land a $2 trillion valuation, though the energy giant and its bankers are looking at a target closer to $1.7 trillion. And other analysts have pegged it around $1.5 trillion. Those are pretty wide disparities.
As CNN notes, selling even 1% of the company at the bottom of that range would fetch $15 billion, while selling 2% at the top could generate $40 billion, eclipsing the record $25 billion IPO by Alibaba in 2014.

“This is definitely a serious event that will be recorded in the history of Saudi Arabia,” Eid Al Shamri, chief executive of investment bank Ithraa Capital, said at his office in Riyadh as the IPO event was broadcast. “A lot of people are talking about it. But what is the extent of the people’s participation? We are tightening our belts.”

It’s not clear how much of Aramco will be sold to locals before shares start trading. People are being encouraged to invest in the kingdom’s most important asset and many Saudis see the IPO as a demonstration of loyalty to the kingdom.

Al Shamri said he heard about people who are thinking of selling their houses or borrowing money to buy shares. Well, that …. can’t be good, because uncertainty looms and no one knows what the payoff will be.

Read more on Fortune.com

Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com

VENTURE DEALS

- Ebury, a London-based provider of foreign exchange, money transfer, and other currency services to small and medium businesses, raised £350 million (or $452 million) from Santander.

- Deserve, a Menlo Park, Calif.-based fintech company that provides credit cards, raised $50 million in funding. Goldman Sachs led the round, and was joined by investors including Sallie Mae, Accel, Aspect Ventures, Pelion Venture Partners and Mission Holdings.

- BuildOps, a Santa Monica, Calif.-based provider of a field service and business process software platform for small and medium-sized subcontractors in the commercial real estate industry, raised $5.8 million in seed funding. Investors include Fika Ventures, MetaProp VC, Global Founders Capital, CrossCut Ventures, TenOneTen, IGSB, 1984 Ventures, L2 Ventures, GroundUp and Wolfson Group.

- Forecast, a Denmark-based project management software startup, raised $5.5 million in funding. Crane Venture Partners led the round, and was joined by investors including SEED Capital and Heartcore.

- Cervest, a U.K.-based earth science AI company, raised 3.7 million pounds ($4.8 million) in funding. Future Positive Capital and Astanor Ventures led the round.

- Soundcheck, a Mill Valley, Calif.-based company that helps optimize web content for voice, raised $1.5 million in seed funding. Investors include True Ventures, Resolute Ventures, Automattic, Biz Stone and Caterina Fake.

PRIVATE EQUITY DEALS

- Yellow Wood Partners acquired Dr. Scholl’s, a footwear brand, from Bayer for $585 million.

- Eurazeo agreed to invest $60 million in Herschel Supply Co, a Canada-based apparel and accessories store. Alliance Consumer Growth, and HOOPP Capital Partners also participated.

- ICV Partners made a significant investment in JK&T Wings, a franchisee of Buffalo Wild Wings, a casual dining restaurant. Financial terms weren't disclosed.

OTHER DEALS

- CynergisTek (NYSE: CTEK) acquired Backbone Enterprises, Inc. DBA Backbone Consultants, a company focused on IT risk advisory services. Financial terms weren't disclosed.

IPOs

- Burger King India, the Indian arm of the U.S.-based fast food chain, filed to raise up to 4 billion rupees ($56.6 million) through an IPO in the country. Everstone Capital backs the firm. Read more.

- XP Inc, a Brazilian financial services firm, plans to list on the Nasdaq, Reuters reports. General Atlantic backs the firm. Read more.

EXITS

- Harvest Partners acquired Yellowstone Landscape, a Bunnell, Fla.-based commercial landscaping maintenance company from CIVC Partners LP. Financial terms weren't disclosed.

- Golden Gate Capital sold Hillstone Environmental Partners, a provider of water pipeline and disposal infrastructure solutions, to NGL Energy Partners LP for about $600 million.

FIRMS + FUNDS

- Altas Partners, a Canada-based private equity firm, raised $3 billion for its second fund, Altas Partners Holdings II LP.

- Unusual Ventures, a Menlo Park, Calif.-based venture capital firm, is seeking to raise $400 million for its second fund, according to an SEC filing.