PHOTO: CNN
Now playing
02:01
Saudi Aramco CEO: Attack will not delay IPO
President of the Federal Reserve Bank of New York, Bill Dudley speaks during the Bank of England Markets Forum 2018 event at Bloomberg in central London on May 24, 2018. (Photo by Victoria Jones / POOL / AFP)        (Photo credit should read VICTORIA JONES/AFP/Getty Images)
PHOTO: Victoria Jones/AFP/Getty Images
President of the Federal Reserve Bank of New York, Bill Dudley speaks during the Bank of England Markets Forum 2018 event at Bloomberg in central London on May 24, 2018. (Photo by Victoria Jones / POOL / AFP) (Photo credit should read VICTORIA JONES/AFP/Getty Images)
Now playing
01:50
Former NY Fed president: Rock-bottom bond rates are not sustainable
American flags hang oustside of the New York Stock Exchange Tuesday, Feb. 16, 2021, in New York. (AP Photo/Frank Franklin II)
PHOTO: Frank Franklin II/AP
American flags hang oustside of the New York Stock Exchange Tuesday, Feb. 16, 2021, in New York. (AP Photo/Frank Franklin II)
Now playing
01:31
Rising bond yields trigger Wall Street sell-off
WASHINGTON, DC - FEBRUARY 01: U.S. President Joe Biden (Center R) and Vice President Kamala Harris (Center L) meet with 10 Republican senators, including Mitt Romney (R-UT), Bill Cassidy (R-LA) and Susan Collins (R-ME), in the Oval Office at the White House February 01, 2021 in Washington, DC. The senators requested a meeting with Biden to propose a scaled-back $618 billion stimulus plan in response to the $1.9 trillion coronavirus relief package Biden is currently pushing in Congress. (Photo by Doug Mills-Pool/Getty Images)
PHOTO: Pool/Getty Images North America/Getty Images
WASHINGTON, DC - FEBRUARY 01: U.S. President Joe Biden (Center R) and Vice President Kamala Harris (Center L) meet with 10 Republican senators, including Mitt Romney (R-UT), Bill Cassidy (R-LA) and Susan Collins (R-ME), in the Oval Office at the White House February 01, 2021 in Washington, DC. The senators requested a meeting with Biden to propose a scaled-back $618 billion stimulus plan in response to the $1.9 trillion coronavirus relief package Biden is currently pushing in Congress. (Photo by Doug Mills-Pool/Getty Images)
Now playing
02:08
Zandi: Stimulus plan doesn't do enough for the most in need
Now playing
01:36
Michael Bolton wants you to break up with Robinhood
Now playing
03:02
Congressman: The stock market needs to protect retail investors
Now playing
03:51
GameStop investor on why he's still holding on
why it's better to invest cash than save it kristen bitterly orig_00012028.png
why it's better to invest cash than save it kristen bitterly orig_00012028.png
Now playing
01:59
Holding onto your cash? History shows it's better to invest it
In this photo provided by the New York Stock Exchange, Michael Urkonis, center, works with fellow traders on the floor during the Signify Health IPO, Thursday, Feb. 11, 2021. Stocks edged higher on Wall Street in early trading Thursday as investors continued digesting solid corporate earnings reports and maintained confidence that a new round of government aid is on the horizon. (Courtney Crow/New York Stock Exchange via AP)
PHOTO: Courtney Crow/AP
In this photo provided by the New York Stock Exchange, Michael Urkonis, center, works with fellow traders on the floor during the Signify Health IPO, Thursday, Feb. 11, 2021. Stocks edged higher on Wall Street in early trading Thursday as investors continued digesting solid corporate earnings reports and maintained confidence that a new round of government aid is on the horizon. (Courtney Crow/New York Stock Exchange via AP)
Now playing
03:08
El-Erian on risks to the market rally
PHOTO: Courtesy Kearns family
Now playing
02:56
Parents of young trader who died by suicide: Robinhood is to blame
kenny polcari market overvalued and stretched orig_00013830.png
kenny polcari market overvalued and stretched orig_00013830.png
Now playing
02:32
Polcari: A healthy market pullback of 5-7% should happen
Bitcoin
PHOTO: CNN
Bitcoin
Now playing
03:17
Tesla invests $1.5 billion in bitcoin
Now playing
02:20
El-Erian: Robinhood is a reminder that 'you have no friends on Wall Street'
People walk by a GameStop store in Brooklyn on January 28, 2021 in New York City. Markets continue a volatile streak with the Dow Jones Industrial Average rising over 500 points in morning trading following yesterdays losses. Shares of the video game retailer GameStop plunged. (Photo by Spencer Platt/Getty Images)
PHOTO: Spencer Platt/Getty Images
People walk by a GameStop store in Brooklyn on January 28, 2021 in New York City. Markets continue a volatile streak with the Dow Jones Industrial Average rising over 500 points in morning trading following yesterdays losses. Shares of the video game retailer GameStop plunged. (Photo by Spencer Platt/Getty Images)
Now playing
01:17
Here's why GameStop shares are plunging
PHOTO: CNN
Now playing
02:22
His risky bet made him a millionaire on paper. It could've gone very differently
NEW YORK, NEW YORK - JANUARY 27: GameStop store signage is seen on January 27, 2021 in New York City. Stock shares of videogame retailer GameStop Corp has increased 700% in the past two weeks due to amateur investors. (Photo by Michael M. Santiago/Getty Images)
PHOTO: Michael M. Santiago/Getty Images
NEW YORK, NEW YORK - JANUARY 27: GameStop store signage is seen on January 27, 2021 in New York City. Stock shares of videogame retailer GameStop Corp has increased 700% in the past two weeks due to amateur investors. (Photo by Michael M. Santiago/Getty Images)
Now playing
03:16
GameStop mania shakes up Wall Street
(CNN Business) —  

Delayed by a year, Saudi Arabia now looks ready to push ahead with a partial privatization of its giant oil company in the coming weeks. The deal under discussion is smaller than previously touted, but could still turn out to be the biggest IPO on record.

Though official details have not been announced, analysts expect that Saudi Arabia will list between 1% and 2% of Saudi Aramco on the Tadawul exchange in Riyadh by the end of the year. An international listing, possibly in Tokyo, could follow in 2020 or 2021.

Splitting the IPO into phases is a departure from the original plan for a market debut in 2018. Then, Saudi Arabia was expected to float 5% of the company, raising as much as $100 billion. It was looking at international markets such as New York or London, as well as Riyadh.

“We’re talking about a much smaller stake sold in the Saudi market,” said Ayham Kamel, the Middle East and North Africa practice head at Eurasia Group, a political risk consultancy.

Estimates of how much the flotation will raise still vary widely. Crown Prince Mohammed bin Salman reportedly wants the deal to value Aramco at $2 trillion; analysts peg it no higher than $1.5 trillion. Selling 1% at the bottom of that range would fetch $15 billion, while selling 2% at the top could generate $40 billion, eclipsing the record $25 billion raised by Alibaba (BABA) in 2014.

Saudi Aramco declined to comment. CEO Amin Nasser, who did not provide fresh details when speaking at an oil industry conference in London on Wednesday, told CNN’s John Defterios last month that the timing of the IPO and the venue “is a government decision.”

’Accelerated timeline’

Aramco has indicated in recent weeks that it’s moving full steam ahead on an initial public offering, reviving a deal that had been shelved due to potential legal complications in the United States and doubts about the valuation sought by bin Salman.

The company announced last week that it plans to pay out an annual dividend of $75 billion between 2020 and 2024. It also amended the structure for royalties paid out to the Saudi government. These moves are an attempt to drum up excitement among investors, Kamel said.

Last month, former energy minister Khalid Al-Falih was replaced as Aramco chairman by Yasir Al Rumayyan, who heads up Saudi Arabia’s Public Investment Fund and is seen as more sympathetic to bin Salman’s ambitions for the IPO.

Aramco is the world’s most profitable company, with vast oil reserves and massive daily output. It holds a monopoly in Saudi Arabia, the world’s largest exporter of crude oil.

Attacks on Saudi oil facilities in mid-September have not derailed the IPO process. In fact, they’ve likely hardened bin Salman’s resolve to get some kind of listing done soon.

“This is why we’re seeing an accelerated timeline,” said Kamel, who thinks the official announcement could be timed to coincide with a big investment conference in Riyadh later this month.

But there are risks to a smaller domestic listing. There’s still plenty of skepticism about valuing the company close to $2 trillion. For comparison, Microsoft (MSFT), the world’s most valuable public company, is valued close to $1 trillion.

It’s also not clear to what extent investors will demand to be compensated for continued geopolitical risk.

“The successful attack surely forces a reappraisal [of] the risk to, and the cost of, preserving the physical security of these assets,” said Hasnain Malik, the Dubai-based head of equity strategy at Tellimer, an investment bank focused on developing markets.

For investors, the consistency of Saudi output will likely outweigh geopolitical fears, Tellimer’s Malik said. And it doesn’t hurt that the Saudi government is reportedly courting powerful anchor investors, including wealthy Gulf families, domestic pension funds and regional sovereign wealth funds.

The big issue in a domestic listing is that even a 1% stake of Aramco could overwhelm the country’s benchmark exchange.

“One risk of a domestic listing is that it might push down the valuation of other listed stocks as available liquidity is limited,” said Steffen Hertog, an expert on Gulf politics at the London School of Economics.

Going international

For bin Salman, a successful domestic listing would still be a win, helping to fund his Vision 2030 plan that aims to wean Saudi Arabia off oil and develop other areas of the economy. But it’s the prospective international debut that drives the most excitement among investors. And that type of listing looks much more difficult.

Saudi Arabia has taken steps to address concerns about transparency as part of its effort to court global investors. Details about the company’s finances were released ahead of a bond sale earlier this year, and Aramco held its first earnings call this past summer.

“The firm has gone a long way in disclosing its assets, cost and revenue structure,” said Hertog. “There needs to be more disclosure for an IPO, but they have been preparing for this for more than two years.”

The valuation question, however, is likely to keep cropping up.

“A lot of foreign investors still think $2 trillion could look a bit pricy,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB).

Other risks include the potential for reduced oil consumption due to concerns about climate change, and questions about the leadership of bin Salman. The crown prince’s standing on the international stage has suffered since the murder last year of journalist Jamal Khashoggi inside the Saudi consulate in Istanbul.

At the same time, slowing global economic growth has injected significant volatility into markets, muddying the outlook into 2020 and 2021, when an international flotation would likely take place.

But if Aramco can get the pricing right, it should be able to withstand the shaky environment, according to ADCB’s Malik.

“Aramco’s fundamentals even in a lower oil price environment are very, very strong,” she said. “They’ve got strong cash flow [and] the dividend remains very attractive.”