Saudi Aramco’s shares soared to the Saudi exchange’s daily 10% limit of SAR 35.20 ($9.39) per share as trading started in Riyadh this morning, giving the company a valuation of $1.88trn. Only 1.5%, or 3bn shares, of the company were listed.
“Today’s milestone underlines the Kingdom’s commitment to nurturing a strong capital market and demonstrates further significant progress in delivering Vision 2030 – the Kingdom’s transformation, economic growth and diversification program that continues with pace and determination,” said Saudi Aramco chairman Yasir Othman Al-Rumayyan.
The initial public offering (IPO) is the world’s largest at $25.6bn, with shares sold at SAR 32 ($8.53), giving the company a valuation of $1.7trn before trading began. Saudi Aramco received $119bn in orders for the $25.6bn offering, and saw bids for 62.6mn shares when the market opened, against an offer of only 500,000 shares, according to Dalma Capital.
“We believe the demand from a broad base of individual investors and such a wide range of institutions reflects trust in our long-term strategy and our vision to become the world’s preeminent integrated energy and chemicals company, operating in a safe, sustainable and reliable manner,” said Saudi Aramco CEO Amin Nasser.
Crown Prince Mohammed bin Salman first floated the idea of an IPO in 2016, claiming the company was worth $2trn, with the aim of raising $100bn in an international offering. It is the cornerstone of his economic diversification programme, and would give his primary investment vehicle, the Public Investment Fund, liquidity to invest into other programmes.
“It has been announced that the ‘greenshoe option’ will be exercised in part or full, upping to deal to as much as $29.4 billion,” said Zachary Cefaratti, CEO of Dalma Capital. “If the full greenshoe is exercised, Aramco will have raised 17% more than Alibaba’s previous record for the world’s largest IPO.”
Aramco’s listing has made Tadawul, the Saudi exchange, the ninth-largest stock market; all of the other companies on Tadawul have a combined value of approximately $500bn, compared to Saudi Aramco’s current valuation of $1.88trn.
“Simple supply and demand dynamics have created strong price action in Aramco’s shares in the first days of trading as many institutional investors have found that they are significantly under their target weight of Aramco due to the oversubscription of the IPO; funds have to buy shares in the first days of trading to weight Aramco appropriately, bidding up the price,” Cefaratti said.
