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Saudi Aramco IPO: How Can Indians Invest in World's Biggest Public Offer

Saudi Arabia’s state-owned company said it would set a price range for the shares on November 17, but the final price will only be determined on 5 December, the day after all subscriptions close.

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Updated:November 20, 2019, 3:37 PM IST
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Saudi Aramco IPO: How Can Indians Invest in World's Biggest Public Offer
Image for representation. (Reuters)

Saudi Aramco's much-anticipated initial public offering (IPO) opened for subscription from 17 November. Local individual investors can submit their bids November 28, while institutional investors get extended time till 4 December for subscribing to the issue.

Saudi Arabia’s state-owned company said it would set a price range for the shares on 17 November, but the final price will only be determined on 5 December, the day after all subscriptions close. Importantly, Saudi Aramco said it would sell an unspecified number of shares on just its local stock exchange Tadawul, and not in Western markets such as the New York Stock Exchange or the London Stock Exchange.

So, for Indian investors interested in the Saudi Aramco IPO, though it is not impossible to grab a piece of the world’s most profitable company, still options are quite limited.

At present, Indians are allowed to remit up to $250,000 per financial year to other countries under the Liberalised Remittance Scheme (LRS). These funds amount can be used for specific current account or capital account transactions, which include making equity and debt investment abroad. The scheme is, however, not available to corporates, partnership firms, HUF (Hindu Undivided Family), Trusts, etc.

This scheme enables Indian retail investors to access overseas equity markets. All you need to do is tie up with a foreign broker who can make a transaction on your behalf or route your trades via domestic brokers who have a tie-up with foreign brokers. However, the domestic broking houses mostly have tie-ups with US-based foreign brokers. So it might be difficult to find a brokerage firm in India which has a tie-up with brokerages in Saudi Arabia.

Notably, some of the domestic brokers reportedly have branches in Gulf countries, but they mostly cater to the needs of NRIs (non-resident Indians) or PIOs (persons of Indian origin) who want to invest in Indian markets and not the other way round.

Or, the other alternative for Indians is to invest through global mutual funds that invest in emerging markets like Saudi Arabia or in global largecap stocks. A few like Kotak Global Emerging Market Fund and Franklin Asia Equity are eligible to invest in the Saudi Aramco IPO. Buying such international mutual funds would possibly give you access to Saudi Aramco shares after the company’s listing.

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