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Finally, after years of delay, the most sought after IPO is back on the stage and the Crown Prince is all set to give out a piece of the crown jewel to steer the economy away from oil. The Saudi government has also taken some preliminary steps to make this listing a success like reducing tax rates, changing royalty payments, and reducing long-term capital expenditure for at least $75 billion of dividend for the shareholders.

It could be the world’s biggest ever listing. However, it seems that the Saudi government is struggling to get institutional investors onboard due to the bearish outlook for the energy sector as well as the economic growth and questions over government interference, security issues and company’s governance.

Meanwhile, local demand is promising as locals are wealthy, and hence the inclination to sell to the retail investors who have more savings and assets would mean that it could provide a buffer to the supposed weaker institutional investor appetite.

The oil giant recently released the prospectus for the initial public offering, and to the dismay of many it lacks disclosure and clarity over things like indication of any price range, purpose of the IPO proceeds, number of shares or a fixed date for the listing. What is revealed is that up to 0.5 percent of the shares will be set for offering to the retail investors; Saudi Aramco has 200 billion shares, which means 1 billion will be sold to these individual investors. What percentage of the issue will be offered to the institutional investors is not known. As for the date, the prospectus says that it will take place between November 17 and December 4 where the final price for the IPO is expected to be announced the next day i.e. December 5.

Another problem that Saudi Aramco has been facing it is run up to listing is its whopping valuation. Despite the company being Saudi Arabia’s main revenue earner, a price tag of $2 trillion is making investment banks and the market doubtful, which is another factor is attracting relatively low institutional interest. The question is: how much is it really worth. The investment banks and research are hoping to get $1.2-1.5 trillion out of the deal. Besides, there have been reports that the company might change its dividend policy without prior notice, which could be another drag.

The company itself has also highlighted some risk concerns like its vulnerability to commodity prices, terrorism, political conflicts, etc. Plus, the biggest challenge it faces is the prospect of falling crude oil prices. To get the best price, Saudi Aramco needs oil prices propped up, which might be difficult right now as Iraq and Russia would much likely continue to disregard the OPEC+ decision of cutting production to shore up prices – unless Saudi Arabia cuts its own production further.