Published: Wed, December 11, 2019
Markets | By Otis Pena

Saudi Aramco shares to begin trading after world's biggest IPO

Saudi Aramco shares to begin trading after world's biggest IPO

Saudi Arabia's government itself sank almost US$2.3 billion in the record-beating initial public offering of the Kingdom's oil giant Aramco, according to one of the lead managers of the deal, which was aimed at attracting fresh funds into the Saudi economic diversification.

"This is a successful IPO and the Aramco listing will add depth to the local market by providing exposure to a vital sector of Saudi Arabia's economy", said Bassel Khatoun, managing director, frontier and MENA at Franklin Templeton Emerging Markets Equity.

Aramco said in a statement to the Saudi Stock Exchange on Wednesday that it has sold 450 million more shares, boosting the value of the offering to $29.44 billion.

Saudi Aramco sold a 1.5 per cent stake in the IPO, while the remainder stays in the hands of the Saudi state.

The sale of Aramco 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.

"It's likely that we will see Aramco bid up to $2 trillion or higher in the first days of trading, and potentially to trade limit up on the first day", Zachary Cefaratti, chief executive officer at Dalma Capital Management Ltd, told Bloomberg. Less than quarter of that, or 23%, was raised from non-Saudi investors, according to Aramco's lead IPO adviser Samba Capital.

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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.

But Riyadh scaled back its global ambitions by only listing Aramco on the Tadawul and cancelling roadshows in NY and London due to muted interest from foreign investors.

The company had announced a sale of 1.5% of its shares at 32 Saudi riyals a share, or what is $8.53.

Aramco is selling 0.5% of its shares to individual retail investors - most of whom are Saudi nationals - and 1% to institutional investors, most of which are Saudi or Gulf-based funds.

Aramco did not name its investors during the IPO process, but sources familiar with the matter have told Reuters the Abu Dhabi Investment Authority (ADIA) and Kuwait Investment Authority (KIA) were among Gulf sovereign funds to buy shares.

This makes Aramco more valuable than Microsoft or Apple, two of the top listed companies in the world. "I can not wait to see the faces of people who missed that opportunity and how they will be chewing their thumbs", the minister said, calling those who invested "friends and family" set to benefit from any future rise in its value.

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