Aramco IPO’s retail tranche oversubscribed

Updated November 29, 2019

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A sign of Saudi Aramco's initial public offering (IPO) is seen during a news conference by the state oil company at the Plaza Conference Center in Dhahran, Saudi Arabia on November 3, 2019. — Reuters/File
A sign of Saudi Aramco's initial public offering (IPO) is seen during a news conference by the state oil company at the Plaza Conference Center in Dhahran, Saudi Arabia on November 3, 2019. — Reuters/File

RIYADH: The retail portion of Saudi Aramco’s initial public offering (IPO) has been oversubscribed, with orders reaching 38.1 billion Saudi riyals ($10.2bn), lead manager Samba Capital said on Thursday.

The state oil giant plans to sell a 1.5 per cent stake, or about 3bn shares, and has said at least one-third of the sale is expected to be covered by retail investors, who have until Thursday to sign up.

With an indicative price of 30-32 riyals, the IPO is valued at as much as 96bn riyals ($25.6bn) and gives the firm a market value of $1.6-1.7 trillion.

It will be the world’s biggest IPO if it tops the $25bn set by China’s Alibaba in 2014.

Around 4.17m retail investors had subscribed to 1.19bn shares by Thursday, injecting 6.13bn riyals above the amount needed for full coverage, Samba said.

Subscription will continue until midnight on Thursday and final results will be announced on Friday, it said in a statement.

The IPO is the centrepiece of Crown Prince Mohammed bin Salman’s plans to diversify the Saudi economy away from its reliance on oil.

Aramco is the crown jewel of the economy and the world’s most profitable company.

It is relying on local and regional demand to pull off the deal, after cancelling marketing roadshows outside the Gulf region due to a lack of interest from foreign institutional investors.

Published in Dawn, November 29th, 2019