ZCZC
BCN-15
SAUDI-ARAMCO-ENERGY-MARKETS-IPO
Saudi Aramco shares to begin trading after world’s biggest IPO
RIYADH, Dec 11, 2019 (BSS/AFP) – Saudi Aramco’s shares begin trading
domestically on Wednesday, after the energy behemoth raised $25.6 billion in
the world’s biggest initial public offering.
Aramco has priced its IPO at 32 riyals ($8.53) per share, the high end of
the target range, surpassing the $25 billion raised by Chinese retail giant
Alibaba in its 2014 Wall Street debut.
The sale of 1.5 percent of the firm, or three billion shares, is the
bedrock of de facto ruler Crown Prince Mohammed bin Salman’s ambitious
strategy to overhaul the oil-reliant economy.
Riyadh’s Tadawul stock exchange said it will hold an opening auction for
Aramco shares for an hour from 9:30 (0630 GMT) followed by continuous
trading, with price changes limited to plus or minus 10 percent.
The company said Friday it could exercise a “greenshoe” option, selling
additional shares to bring the total raised up to $29.4 billion.
The market launch puts the oil behemoth’s value at $1.7 trillion, far
ahead of other firms in the trillion-dollar club, including Apple and
Microsoft.
But the scaled-down IPO is still a far cry from the blockbuster originally
planned by Prince Mohammed.
The much-delayed stock sale, first announced in 2016, was initially
expected to raise as much as $100 billion from the sale of up to five percent
of the company.
The government’s plans to raise additional funds by listing on a major
international market are also on hold.
The IPO fell short of Prince Mohammed’s desired $2 trillion valuation.
But the government is trying to persuade wealthy families and institutions
to buy Aramco shares after it floats in a last-ditch effort to reach the $2
trillion mark, the Financial Times reported on Tuesday.
The Saudi government itself has pumped in huge funds to boost the IPO,
which was originally intended to raise external funding for the kingdom’s
diversification plan.
Two-thirds of the shares were offered to institutional investors. Saudi
government bodies accounted for 13.2 percent of the institutional tranche,
investing around $2.3 billion, according to lead IPO manager Samba Capital.
The IPO is a crucial part of Prince Mohammed’s plan to wean the economy
away from oil by pumping funds into megaprojects and non-energy industries
such as tourism and entertainment.
But sceptics say the proceeds will barely cover the kingdom’s budget
deficit for a year.
The IPO was heavily focused on Saudi and other Gulf traders. International
investors have remained sceptical about the secretive company’s targeted
valuation.
The IPO also comes with oil prices under pressure due to a sluggish global
economy hit by the US-China trade war and record output by non-OPEC crude
exporters.
BSS/AFP/HR/1330