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Saudi Aramco's IPO a make-or-break moment for controversial prince
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RIYADH, Saudi Arabia — Saudi Arabia is expected to set a new record for the largest stock flotation in history on Wednesday with the sale of part of Aramco, the state-owned oil company valued at $1.7 trillion.
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The offering's success is crucial to the ambitious plan by Crown Prince Mohammed bin Salman to overhaul Saudi Arabia's economy and wean it off its reliance on oil revenue for survival.
The company is looking to raise $29.4 billion from selling a 1.7 percent stake on the local Saudi exchange, making it the world's biggest-ever initial public offering. Prince Mohammed had envisioned an even bigger stock market debut for the kingdom's crown jewel. The aim is to attract foreign investment to rapidly create jobs for millions of young Saudis entering the workforce as he prepares to inherit the throne.
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The government has traditionally been the primary employer of Saudis, but lower oil prices, a budget deficit and a large young population mean the private sector must expand to absorb new entrants into the workforce to keep unemployment from rising beyond 12 percent.
The flotation is "a step in the right direction that will enable the crown prince to build confidence around Aramco,” said Ayham Kamel, head of Eurasia Group's Middle East division.
That could lead to confidence in the Saudi economy and generate billions of dollars in capital to invest in job-creating projects, analysts say.
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