Saudi Aramco raises $25.6 billion in biggest-ever IPO
Published: 09:49 PM, 6 December 2019
Saudi Aramco on Thursday priced its long-awaited IPO at the high end of the target range, raising $25.6 billion and giving the energy giant a valuation of $1.7 trillion in the world’s biggest stock sale.
Aramco priced its initial public offering at 32 riyals ($8.53) per share, surpassing the $25 billion raised by Chinese retail giant Alibaba when it debuted on Wall Street in 2014.
The sale of 1.5 percent of Aramco was oversubscribed 4.65 times, the energy giant said in a statement, but the scaled-down IPO is still a far cry from the blockbuster originally planned by Crown Prince Mohammed bin Salman.
The much-delayed stock sale, first announced in 2016, was initially expected to raise as much as $100 billion from the sale of up to five percent of the company.
The IPO is the bedrock of Prince Mohammed’s ambitious strategy to overhaul the oil-reliant economy by pumping funds into non-energy industries.
But skeptics say the IPO’s proceeds would barely cover the kingdom’s budget deficit for a year.
The market launch puts the oil behemoth’s value at $1.7 trillion, far ahead of other firms in the trillion-dollar club: Apple ($1.2 trillion), Microsoft and Alibaba ($1.1 trillion).
However, it fell short of the $2 trillion mark that de facto ruler Prince Mohammed was aiming for.
Aramco will begin trading three billion shares on the country’s Tadawul stock exchange December 12 at a tarting price of 32 riyals, two sources told AFP.
That price is at the top of the range set last month, even though the banks advising the company called on Saudi authorities to be cautious to avoid volatile price swings in the first days of trading.
– Cash cow –
The IPO is heavily focused on Saudi and other Gulf traders as international investors have remained ceptical about the secretive company’s targeted valuation, as well as harbouring doubts over its transparency and governance practices.
There are also concerns about dipping profitability as Aramco has acknowledged that climate change concerns could reduce demand for hydrocarbons and see global oil demand peak within the next 20 years.
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 Aramco, a cash cow that turned the kingdom into the Arab world’s biggest economy, appears to hold enormous appeal for local retail investors, some of whom have incurred debts to fund share purchases.
Last week, the company announced that retail subscriptions had been oversubscribed.
The government used a series of initiatives to encourage Saudis to buy a stake in the kingdom’s crown jewel, including offers of easy bank loans and nationalist rhetoric portraying the investment a patriotic duty.
Aramco has also provided local investors with promises of higher dividends and the opportunity to obtain additional free shares if they hold their initial shares for some time.
It pledged to pay $75 billion in dividends in 2020.
Some of the wealthiest families and individuals in Saudi Arabia have reportedly been obliged to invest.
They are rumoured to include billionaire prince Al-Waleed in Talal, who was among the businessmen locked up in Riyadh’s Ritz-Carlton Hotel during an “anti-corruption” crackdown in 2017.
Aramco’s plan to raise additional funds by selling further shares on a major international market are currently on hold.
The company is considered the pillar of the kingdom’s economic and social stability and produces about 10 percent of the world’s oil, so investors are betting on a long-term rise in oil prices.
That could be helped by a new agreement to cut production among the 14 member countries of the Organization of the Petroleum Exporting Countries (OPEC) along with other major crude exporters.
OPEC was conducting delicate discussions on Thursday in Vienna, set to continue Friday, regarding the production agreement and any further cuts.
- 4 marine academies to be launched this year
- Seven-morning tasks will keep you refresh for daylong
- ‘BNP conspiring sensing defeat in city polls’
- British Airways canceled all flights to China
- Zimbabwe consolidate lead after Raza`s seven
- Govt forms 7 committees to guard rice market
- Stronger effort need to rein child death in country: Study
- Rickshaw driver killed in Sunamganj road crash
- Apple delivers best-ever quarter, powered by iPhones, services
- 4 BIHT students expelled over ragging
- 1390 mt onion arrived from Myanmar in one day
- Free sewing training to 100 women in Faridpur
- 6 held with yaba in Capital
- Question leak clique member held in Kushtia
- Bangladesh takes on South Africa U-19 tomorrow
- BPL begins on 13 February
- Mushfiq to miss BCL first round
- Australian scientists first to recreate ‘Coronavirus’
- CMH transplants bone marrow first time
- PM urges FFs to tell country’s Liberation War history to youths
- RAB detained 2 with drugs
- Car loaded 576 can beer seized in capital, 2 arrested
- ‘History of Bangladesh Rock: The Legacy of Azam Khan’
- Govt ready to bring Bangladeshis trapped in China’
- HC for recruit 117 doctors in prison hospitals
- Allama Azhar Ali Anwar Shah dies
- 57 kg weed seized in Ashuganj, arrested 2
- 1 arrested with Yaba-heroin in Mohadevpur
- Man gets death for killing wife in Kushtia
- Salma to lead Tigress in T20I World Cup
- All News »
- Rapists cheer on Facebook Live after rape in Gazipur
- 5,000 students get scholarship of Jahangir Alam Foundation
- China virus deaths rise to 17, heightening global alarm
- High levels of Uranium found in Cox’s Bazar
- Cox’s Bazar-St. Martin fare Tk 15,000!
- Coronavirus: 11 under observation in India, Bangladesh on alert
- ‘Dil Toh Happy Hai Ji’ actress Sejal Sharma commits suicide
- ICJ orders Myanmar to protect Rohingya, to preserve evidence
- Rohingya killing resumed defying ICJ order
- Record: Trump tweets, retweets 125 times in a day
- Comilla University’s 1st convocation Monday
- Coronavirus death toll jumps to 25 with 830 cases: govt
- Two siblings among 3 electrocuted in Hazaribagh
- Bangladesh enters e-Passport era
- World court’s four orders against Myanmar
- Coronavirus death toll climbs to 106
- Bangladesh meet Burundi in semifinal today
- Basketball legend Kobe Bryant dies in helicopter crash
- Coronavirus infected identified in Israel
- Tambadu: The man who stands beside distress Rohingya
- Evaly accused of cheating over online offers
- ‘Jamalpur Express’ to be launched tomorrow
- E-passport is a ‘Mujib Barsho’ gift for nation: PM
- E-passport to be launched today
- Court orders to publish ads asking SK Sinha, 10 others to appear
- 3 US crew killed in Australia firefighting plane crash
- 2 Bangladeshis receive Padma Bhushan, Padma Shri awards in India
- China lies over coronavirus infected, it topped .9 million!
- ‘Coronavirus will not enter Bangladesh’
- Bangladesh meet Pakistan in 3rd T20 today