Published: Tue, December 03, 2019
Markets | By Otis Pena

Saudi Aramco attracts $38bn in orders from institutional investors

Saudi Aramco attracts $38bn in orders from institutional investors

Institutional investors have already put in 144.1 billion riyals ($38.4 billion) worth of bids for Aramco's planned IPO, which is more than double the capital it seeks to raise from institutions.

The deadline to submit bid forms for institutional investors, such as banks or hedge funds, is set for December 4, while the deadline for retail investors - which starts November 17 - is set for November 28.

The state-owned oil giant plans to sell 1.5% of the company's shares for as much as 96 billion riyals ($25.6 billion), a deal which would give it a market value of $1.7 trillion.

Saudi Arabia is planning to use its position at the head of the Opec oil cartel to buoy global oil prices before the $25bn stock market debut of its state-owned oil giant.

"Each index constituent weight reaches or exceeds the threshold will be limited in accordance with defined borders", Tadawul said in a statement on Monday.

Aramco has previously said 0.5% of the offering will be allocated to retail investors, leaving 1% - or 2 billion shares - for institutional buyers.

Saudi Arabia's launch of the Aramco IPO has so far received a mixed response from investors, 1.7 times oversubscribed.

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Tadawul also says it has implemented the "Quick Entry" new rules that allow the IPO shares to be included in all-stock equity indexes at the close of the fifth trading day.

Currently Al Rajhi Bank has the largest weighting on the TASI at around 16%, followed by National Commercial Bank (NCB) with 7% and petrochemical giant SABIC with 6.8%.

Aramco has received $44.3 billion in bids so far from institutional and retail investors for the IPO, lead manager Samba Capital said last week.

The organisation, which pumps nearly a third of global oil supply, sees oil consumption in 2023 reaching 103.9 million barrels per day (bpd), down from 104.5 million bpd in last year's report.

Saudi Arabia is attempting to diversify its economy and reduce its reliance on oil revenues under a plan called Vision 2030 directed by Crown Prince Mohammed bin Salman.

The veteran oil official wants to ensure oil prices stay high enough for Aramco's IPO, sources said.

OPEC's production of crude oil and other liquids is expected to decline to 32.8 million barrels per day (bpd) by 2024, the group said in its 2019 World Oil Outlook published on Tuesday.

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