Saudi Aramco set a valuation target for its initial public offering well below Crown Prince Mohammed bin Salman's goal of $2 trillion and pared back the size of the sale after the government decided to make the deal an almost exclusively Saudi affair.
The IPO will now rely on local investors after most international money managers balked at even the reduced price target. The deal won't be marketed in the U.S., Canada or Japan and bankers told investors Monday that roadshow events in London and other European cities, planned for this week, were canceled.
Aramco will sell just 1.5% of its shares on the local stock exchange, about half the amount that had been considered, and seek a valuation of $1.6 trillion to $1.71 trillion. As well as slimming down the deal, the Saudi authorities relaxed lending limits to ensure sufficient local demand to get the share sale done.
While the new valuation means Aramco will overtake Apple Inc. as the world's biggest public company by some distance, the plans are a long way from Prince Mohammed's initial aims: a local and international listing to raise as much as $100 billion for the kingdom's sovereign wealth fund.
At the lower end of the price range, the offer would fall short of a record, coming in just below the $25 billion raised by Alibaba Group in 2014.
Aramco CEO Amin Nasser kicked off the IPO's final phase Sunday at a presentation for hundreds of local fund managers in Riyadh.
This is "a historic day for Saudi Aramco," Mr. Nasser said. "We are excited about the transition to being a listed company."
With the offer price putting Aramco's maximum valuation at about $1.7 trillion, there should be room for investors to make some money, said one local investor, who like all the people attending asked not to be identified.
Aramco will need to lean heavily on local investors, large and small, to get the job done. The Saudi Arabian Monetary Authority will allow smaller retail investors to borrow twice their cash investment, double the normal leverage limits the regulator allows for IPOs, according to people familiar with matter.
The kingdom's richest families, some of whom had members detained in Riyadh's Ritz-Carlton hotel during a so-called corruption crackdown in 2017, are expected to make significant contributions to the IPO.