Aramco also plans for an IPO of its energy-trading business. Credit: John R Perry from Pixabay.

Saudi oil giant Aramco’s base oil subsidiary Luberef has received approval from Saudi Arabia’s financial regulatory authority Capital Market Authority (CMA) for an initial public offering (IPO).

As part of the IPO, Saudi Aramco Base Oil Company (Luberef), formerly Saudi Aramco Lubricating Oil Refining Co, intends to offer 50.045 million of its shares to investors. This is equivalent to approximately 29.66% of Luberef’s share capital.

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The IPO is expected to earn nearly $1bn for Luberef, reported Bloomberg News.

Aramco currently owns a 70% stake in Luberef, which produces base oils used in lubricants for motor vehicles, ships, and industrial machinery.

Saudi investment bank Jadwa Investment holds the remaining 30% stake in the refinery business, which has operations in the industrial cities of Jeddah and Yanbu, in Saudi Arabia.

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In June 2022, Bloomberg reported that Citigroup, HSBC, and SNB Capital were selected to advise on the IPO that is could raise approximately $1bn.

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In a press statement, CMA said: “The CMA’s approval on the application shall be valid for six months from the CMA Board resolution date. The approval shall be deemed cancelled if the offering and listing of the company’s shares are not completed within this period.”

In a separate development, Aramco is looking to divest stakes in its oil trading business, reported Bloomberg News, citing people familiar with the matter.

The firm has offloaded stakes in units that lease its oil and gas pipelines to undisclosed private equity investors.

Aramco is also planning for an IPO of its energy-trading business.

This month, Saudi Aramco reported its second-highest earnings as a listed company, although its downstream unit, responsible for refining, chemicals, and fuel distribution, made a pretax loss of $1.1bn, versus almost $4bn in profits a year earlier.