Saudi Aramco IPO secures orders worth $38 bln from institutions

Daniel Fowler
December 3, 2019

Institutional bids received during the first 12 days of the book-building period, which continues until December 4, now stand at more than 118 billion riyals (US$31.5 billion, €28.6 billion), Aramco said.

The world's most profitable company is seeking to raise around US$25 billion (RM104 billion) - a fraction of the US$100 billion it once sought - from its much-delayed initial public offering that is heavily focused on domestic and Gulf investors. The Saudi oil giant has received subscription orders from institutional buyers for around 4.6 billion of shares so far, Samba Capital, NCB Capital and HSBC Saudi Arabia said.

"Each index constituent weight reaches or exceeds the threshold will be limited in accordance with defined borders", Tadawul said in a statement on Monday.

The new measures will "ensure more balanced indices, which will accurately represent the movement of the market, enhance disclosures and transparency and minimize securities' dominance", Tadawul's CEO Khalid Al Hussan said in a statement.

At a time institutional investors are racing to win a stake in the Saudi Aramco IPO, considered the largest offering witnessed by global markets, the Saudi Arabian Monetary Agency (SAMA) said yesterday that the financial situation of banks in the Kingdom is very reassuring in terms of liquidity and lending rates.

The retail tranche, which closed on that date, attracted bids worth 47.4 billion riyals, equivalent to around 1.5 times the number of shares offered. Even with such a small percentage of listing, Saudi Aramco has managed to grab more than 44 billion dollars of investment.

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Tadawul also says it has implemented the "Quick Entry" new rules that allow the IPO shares to be included in all-stock equity indexes at the close of the fifth trading day.

The fund has interests in ports, airports and power distribution globally.

The deal is the centrepiece of Crown Prince Mohammed bin Salman's plans to diversify the Saudi economy away from oil.

The strict stance on oil output may be enough hold prices at $65 a barrel but it is "unlikely that Opec+ will be able or willing to push prices up significantly higher despite Saudi Arabia's aspirations", he added.

OPEC's production of crude oil and other liquids is expected to decline to 32.8 million barrels per day (bpd) by 2024, the group said in its 2019 World Oil Outlook published on Tuesday.

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