Saudi Aramco Glides its Way to Success with World’s Largest IPO
Last updated on December 7th, 2019
The Initial Public Offering set to take place next week will posit Saudi Aramco as the only firm making the world’s largest IPO. In making its market debut, the state-owned firm will raise $25.6bn (£19.4bn) and emerge as the world’s most valuable listed company with its shares at 32 riyals ($8.53) a piece.
Once accomplished, this IPO will exceed the record of $25bn debut of the Chinese online retailer Alibaba. It would also leave behind Apple, that was previously valued at $1.17tn. The prices of the shares were confirmed on Thursday prior to the start of trading on Dec 12.
The listing is close to what Saudi Aramco has expected but still does not comply with the ambition of Saudi Crown Prince Mohammed Bin Salman, who wished the firm to be valued at $2tn.
After marketing the float almost exclusively to investors in the Middle East and Saudi Arabia, Saudi Aramco has plans to list only 1.5 percent of the company on the local Tadawul stock exchange. Earlier, the firm was supposed to sell nearly 5 percent via a dual-listing on the Saudi market and on a major international stock exchange.
In November, Saudi Aramco was focused at selling nearly 1.5 percent of its 200 billion shares. In case an option to sell more shares is exercised, the size of the deal could still rise to $29.4 billion.
If the partial privatization of the company is successfully executed, a new age of economic liberalization would be initiated in Saudi Arabia. Moreover, the huge stock exchange would aid in meeting the Vision 2030 plan of Mohammed bin Salman.
The cost of oil still holds importance as the OPEC meeting held on Dec 5 in Vienna considered cutting production by an additional 500,000 barrels per day.
Giving a history of its success in the past few years, Aramco took to Twitter. The firm tweeted, “History bears witness to our continued efforts in supplying the world with energy… Learn about the early stages of our journey.”
Even though Saudi Aramco is optimistic about results of the IPO, it has lost support from many international investors who are doubtful about the valuation. On the other hand, the demand raised by the local investors was thrice oversubscribed after the Saudi government encouraged wealthy Saudi families and Middle Eastern investors to support the IPO.
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