Saudi Aramco’s IPO oversubscribed; reels in $44 billion

Saudi Arabia’s oil giant Aramco has attracted total bids of $44.3 billion for its initial public offering. This is 1.7 times the money the Kingdom hoped to raise with the world’s largest listing ever.

According to one of the IPO’s lead managers, Samba Capital, quoted by Bloomberg, the IPO has attracted a total of 166 billion Saudi riyals as of Friday, after the subscription period for retail investors ended on Thursday last, and less than a week before the end of the subscription period for institutional investors.

Saudi Arabia will be offering up to 0.5 per cent in Aramco to retail investors, while in total the Kingdom plans to list 1.5 percent of the company on the Saudi stock exchange, the Tadawul.

Aramco has set an indicative price range of 30-32 Saudi riyals, ($8-8.52), per share, in its long-awaited initial public offering, which would give the company a total value of some $1.7 trillion. Saudi Arabia aims to raise more than US$25 billion from selling 1.5 percent in its crown jewel.

Over the past week, Aramco’s IPO has drawn more bids than in the period to November 21, when the orders were nearly $20 billion. The Kingdom has doubled the leverage limits for loans that banks will extend to domestic retail investors who want to buy shares, looking to ensure that more retail customers will buy shares.  

The retail portion of the IPO has already been oversubscribed, Samba Capital said last week, when the retail subscription period expired. The institutional subscription periods ends on December 4, and Aramco will announce the final offer price of the IPO on December 5. 

Seeing that foreign institutional investors are not rushing to buy shares, Saudi Arabia is said to be tapping friendly governments in the Persian Gulf region to ensure the success of the IPO. Kuwait and Abu Dhabi may invest US$1 billion and US$1.5 billion in Aramco’s offering, respectively.

Shekhar Ghosh is a communications consultant and and former journalist, who has edited and written for publications such as like Business India, Business Standard, Business Today and Outlook.

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