As a side note for those of you who are registered to this blog, I noticed that some of my posts are prone to be redirected to the spam box. I encourage you to verify your spam box and maybe check if you have not missed any post. So far, I always post an article over the week-end, so if you did not have one, it's in your spam... A good way to avoid future loss of email is to whitelist me as a sender.
I did not say it's a little company. I said it's a tiny little share of a company which got sold. A mere 1.5% in exchange for $25.6b (yes billion). The rest of the company (98.5%) still belongs to the same historic private shareholders. In case you have not followed "The news of the week" 😉, this is the IPO of Aramco, which reached a valuation of 2 trillion USD yesterday. I know, it's another unfathomable number, so let me give you the scale of it. A rounding error aside, it's like saying that one company (Aramco) is worth the entire Market Capitalisation of all listed companies in the 4th economy of the world (yes, this is Germany). So Aramco = Volkswagen + Daimler + Allianz + BMW + Siemens + Deutsche Bank + Deutsche Telecom + ... another 500 global market leading German companies 😧!
I had the chance to go to "the" Aramco site a few years ago (selling and implementing software brings you to so many parts of the world!). I say "the" site, because this is where they discovered oil back in the early 1930s. Going there shows a totally different perspective on the world. This discovery (oil in Middle-East) had one of the biggest geo-political influence on the planet in the last 80 years. It literally changed the planet.
As the close circle of Saudis have juiced the Oil for so many decades, since the turn of the 21st century, they have slowly but surely transitioned into non-oil related activities, businesses and other interests. Dubai is the perfect example. From a desert to a mega-city with a 1km-high tower build on sand 🤭. It's just impossible to imagine until you go there and see it. Eight lanes motorways (each side, that means 16 lanes...) mostly empty and going miles after miles... into the desert!
Money like it's pouring down the oil pipe... Aramco made over $110b of profit in 2019... With that kind of money, you plug the UK deficit and get enough change to plug those of a few other European countries... Each year!
There is no personal income tax in Saudi. And it is estimated that foreigners filled 66% of the jobs in the country (so much for Brexit and the bloody foreigners!). No problem with that, because the Saudi nationals got mostly granted by the oil pipelines. 34 million people, 10 million are employed out of which 6.6m are foreigners... Do the maths to realise how many nationals are still sustained by the state.
But the Kings of this part of the world have the best advisors on the planet, and the cristal ball has a very clear image: in the future, oil is bad and green is good, in the future, oil does not sell as much as wind farms... Slowly, they have started a little revolution: asking Saudi nationals to work! They understand it cannot be done in a year, not even in a decade. It will take a generation to transition from totally sponsored individuals to ones taking their responsibilities and working for others or for themselves. Selling 1.5% of Aramco is part of this change. If in the next 2 years, they happen to need another $50b to plug a gap, they will offer a bond at a ridicule 1% interest (remember Apple managed to pay 0% interest on Euro Bonds), or very worst case, sell another tranche of 0.5% of the company.
The media would like us to think that there is nothing else than EU vs Brexit, or nothing else than US vs China. The world is far bigger than the magnifying glass of the western media interests. The world is so big that somewhere in the desert, one single company owned at 98.5% by a handful of people is as big as all companies in Germany, and has been big enough to sustain, nearly on its own, the lives of 25-30m people for many decades.
The world is big for everybody to have a chance. As year end is approaching, take some time to review your goals. We live in a world where trillion dollars are made or printed year-in year-out. A few little flakes will do!
To your journey!