Published: Tue, December 10, 2019
Markets | By Otis Pena

Saudi Aramco IPO proceeds rise to US$29.4b after option exercised

Saudi Aramco IPO proceeds rise to US$29.4b after option exercised

But the move has yet to be decided, given the uncertainty surrounding the oil industry's future and Saudi Arabia's confrontation with Iran.

Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, however, said Aramco's market cap could soon climb to more than $2 trillion - a value that was set by his half-brother Crown Prince Mohammed bin Salman three years ago when he introduced the idea of an IPO. A lead bank advising Aramco on the IPO said Monday the company is selling a 1.7% stake for $29.4 billion following strong interest by local Saudi funds. Focus on Saudi investors Some 0.5% of total shares will be reserved for purchase by individual investors.

Aramco said at the time that it would price the shares between $8 to $8.53, putting the company's valuation between $1.6 trillion to $1.7 trillion. The rest will be open to institutional investors, including sovereign wealth funds, asset managers, and government-run pension programs.

Analysts say Saudi Arabia needs oil prices at least above $70 a barrel to balance its budget. Foreign investors, including the neighboring Gulf Arab countries, were previously expected to account for around 10.5% of orders.

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This would seem like a rather innocent hiccup were it not for the surrounding details. This latest thread is only in the beginning stages of being tugged and unraveled.

The sale is expected to break the record for the biggest flotation ever when trading commences on the Saudi stock exchange Wednesday.

Kamel, of Eurasia Group, said the real test for the prince's diversification plans will come in 12 or 18 months when Aramco could choose to sell more shares on an worldwide exchange. Now there are no immediate plans to list on an worldwide stock exchange. It made net income of $111 billion past year, more than any other company globally.

Aramco's overall worth exceeds that of the world's top two companies, Microsoft and Apple.

The attack underscored how Aramco's stability and security is tied to that of the Saudi government and its ruling family, who also stipulate Aramco's oil production levels. Oil-producing companies met on Thursday for a conference in Vienna where they discussed reducing production to drive up global fuel and energy prices.

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