Retail subscription to Luberef’s IPO starts today

Logo of Saudi Aramco Base Oil Co. (Luberef)

Retail investors will start today, Dec. 14, subscription to about 12.51 million shares of Saudi Aramco Base Oil Co. (Luberef), or 25% of total offered shares, at SAR 99 each, as set by the book-building process. 

The subscription process for the retail tranche will run for five days until Dec.18. 

The Capital Market Authority (CMA) approved, on Nov. 24, the company's request to float a 29.66% stake, or 50.04 million shares, in an initial public offering (IPO).

The company’s institutional offering, which ended last week, was 29.5x covered. 

This will be the 17th listing on the main market this year, after East Pipes Integrated Company for Industry (Jan. 24), Scientific & Medical Equipment House Co. (Jan. 31), Elm Co. (Feb. 3), Al-Dawaa Medical Services Co. (Feb. 27), Al Masane Al Kobra Mining Co. (March 9), Nahdi Medical Co. (March 13), Saudi Home Loans Co. (March 27), Retal Urban Development Co. (June 5), Alamar Foods (July 20), Naqi Water Co. (July 27), Arabian Drilling Co. (Oct. 18) and Power and Utility Company for Jubail and Yanbu (MARAFIQ) (Oct. 26), Perfect Presentation for Commercial Services Co. (2P) (Nov. 1), Americana Restaurants International Plc (Americana Restaurants) (Nov. 14), Riyadh Cables Group Co. (Nov. 21) and Al-Saif Stores for Development & Investment Co. (Alsaif Gallery) (Dec. 5).

Last year witnessed nine listings, including Alkhorayef Water and Power Technologies Co. (March 1), Theeb Rent a Car Co. (March 29), Tanmiah Food Co. (Aug. 4), Arabian Internet and Communications Services Co. (solutions) (Sept. 30), ACWA Power (Oct. 11), Arabian Contracting Services Co. (Nov. 15), Nayifat Finance Co. (Nov. 22), Saudi Tadawul Group (Dec. 8) and Almunajem Foods Co. (Dec. 20). 

Company Profile 

Luberef is a Saudi joint stock company, established as a limited liability company in 1976 in Jeddah, and transformed into a closed joint stock company in 2022.

The company's current share capital is SAR 1.6875 billion, divided into 168.75 million shares.

The core activities include manufacturing of refined petroleum products, synthetic plastics and rubbers in their primary forms, as well as other chemical products not classified elsewhere. The company is also involved in the wholesale of solid, liquid and gaseous fuels and related products.

Luberef is the sole producer of unrefined base oils in the Kingdom and one of the largest producers of base oils in the world. Its products are sold in the Kingdom and around the world, including the Middle East, North Africa, the Americas and Europe. 

The firm produces several Group I and Group II base oil products besides manufacturing many by-products such as asphalt, marine heavy fuel oil (MHFO), slack wax, bright stock extract, sulfur and white products such as ultra-low sulfur diesel (ULSD), naphtha and drilling fluid. 

The company markets its main products under Saudi Aramco-licensed brands, Group I base oil products under the aramcoDURA brand, Group II base oil products under the aramcoPRIMA brand, and Group III base oil products under the aramcoULTRA brand. 

Luberef said in its prospectus that it is currently undertaking a number of projects and studying others to improve its performance and expand its business and activities, including the second expansion project in Yanbu, the Business Transformation Initiative, and the Oil Industries Complex in Yanbu.

Production Facilities:

Luberef currently has two production facilities, one in Jeddah and the other in Yanbu, both of which are in a strategic location on the Kingdom’s western shore.

The following table shows the details of the two facilities:

*By-products include white products. 

Production Capacity:

Luberef's base oil production capacity is currently 1.3 million metric tons per year, placing the company as the second largest producer in terms of production capacity in the Middle East in 2021.

The tables below show the company's production capacity compared to other producers in the Middle East, and the capacity of the Yanbu production facility compared to other producers around the world:

Yanbu production facility is among the top 10 facilities in the world, as shown in the following table:

Base oil production cost:

The production cost of a base oil unit, excluding feedstock, reached about $119 per ton in 2021, which is less than about 60% of the average for other base oil producers, as shown in the following table:

Subsidiaries:

The company has one wholly-owned subsidiary, Saudi Aramco Base Oil Company – Luberef FZE, and was established in 2014 as a free zone limited liability establishment in the UAE.

Luberef FZE's activities under its trade license are the import, export and trading of petroleum products, chemicals, diesel, lubricants and base oils. Luberef FZE does not currently carry out any material activities and does not own any material assets, but its main role is to facilitate the import and storage activities carried out by the company in the Hamriyah Free Zone.

*Luberef will purchase treasury shares from Jadwa Industrial Investment Co., in parallel with the offering process.

For More IPOs