Saudi Aramco shares increase 10% after world's biggest IPO

Daniel Fowler
December 11, 2019

That gives the state-controlled oil giant a market value of about $1.88 trillion, comfortably making it the world's most valuable listed company, but well below the $2 trillion price-tag long sought by Saudi Crown Prince Mohammed bin Salman.

Saudi Aramco's shares begin trading on the domestic stock market Tadawul on Wednesday, after the energy behemoth completed the world's biggest initial public offering.

Saudi Aramco executives, including the chief executive, Amin Nasser, and the head of the Saudi sovereign wealth fund, were showered with gold ticker tape in a ceremony at the Tadawul, the Saudi stock exchange in Riyadh, as they signed documents on stage after an extended opening auction.

Aramco is selling 0.5% of its shares to individual retail investors - most of whom are Saudi nationals - and 1% to institutional investors, most of which are Saudi or Gulf-based funds.

In this September 20, 2019 file photo, workers are seen in Aramco's oil separator at processing facility in Abqaiq, near Dammam in the Kingdom's Eastern Province.

The IPO process had put the energy giant's value at US$1.7 trillion, far ahead of other firms in the trillion-dollar club, including Apple and Microsoft.

Aramco is listing its shares on Wednesday on the Saudi exchange after completing the largest IPO on record.

"Today we make history as Saudi Aramco marks the beginning of an important new chapter in our company's journey of prosperity", he added.

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But the scaled-down offering is still a far cry from the blockbuster originally planned by Prince Mohammed who had eyed a $2.0 trillion valuation.

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 Saudi government itself has pumped in huge funds to boost the IPO, which was originally meant to raise external funding for the kingdom's diversification plan.

Gulf Cooperation Council investors, however, are confident the stock price has plenty of room to increase, boosted by incentives that go from bonus shares to fast inclusion in emerging-market benchmarks.

The IPO fell short of Prince Mohammed's desired $2 trillion valuation. Less than quarter of that, or 23%, was raised from non-Saudi investors, according to Aramco's lead IPO adviser Samba Capital.

But sceptics say the proceeds will barely cover the kingdom " s budget deficit for a year. Global investors have remained sceptical about the secretive company's targeted valuation.

Its debut comes as oil prices are being supported by a Saudi-orchestrated move by the Organization of the Petroleum Exporting Countries (OPEC) and oil-producing allies to commit to some of the industry's deepest output cuts in a decade to try to avert oversupply.

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