Saudi Aramco has raised $25.6bn from the initial public offering (IPO) of shares in the company, making it the biggest-ever IPO in history.
In a statement released on 5 December, Aramco said it has set a final price of SR32 ($8.53) a share, which, when multiplied by the 200 billion shares that make up Saudi Arabia’s national oil company, puts the overall worth of the enterprise at $1.7tn.
While the final valuation achieved by Aramco falls $300bn short of the $2tn value Riyadh had sought, the announcement brings to a head the nearly four-year-long decision-making process for the share sale exercise started by Saudi Crown Prince Mohammed bin Salman in January 2016 as the centrepiece of the Vision 2030 socio-economic transformation programme.
Aramco said in its IPO prospectus, released on 9 November, that it would offer 1.5 per cent or 3 billion shares to investors – of which 1 per cent was offered to institutional investors and 0.5 per cent to retail investors.
However, Aramco said that to cover for short positions that could arise from over-allotments of shares, the ‘selling shareholder’, or the Saudi government, has granted the stabilising manager – the Saudi unit of US investment bank Goldman Sachs – a ‘purchase option’.
As part of this ‘purchase option’, the “stabilising manager may purchase from the selling shareholder up to a maximum of 450,000,000 additional shares, representing 15 per cent of the offering size (the ‘over-allotment shares’) at the final offer price” of SR32, Aramco said in its statement.
In the event of such a purchase option being exercised, the total offering size will rise to 3.45 billion shares, representing an IPO capitalisation amount of $29.4bn.
Aramco said its IPO generated a combined $119bn-worth of subscriptions from institutional and retail investors.
Aramco also said its IPO was oversubscribed 4.65 times, with institutional investors pumping in $106bn out of the $119bn-worth of total subscriptions received.
It was earlier reported that sovereign wealth funds such as Abu Dhabi’s ADIB, India’s NIIF, Singapore’s GIC, Kuwait’s KIA, and Chinese and Russian state funds were keen on investing in the Aramco IPO, after the state firm only held roadshows in the region and cancelled outside events due to a reported lack of interest from Western investors.
Institutional investors have until 8 December to make the payment for their subscriptions.
Aramco said it would refund any excess money received from retail investors by 12 December.
The energy giant, however, is yet to announce the key date for the start of trading of its shares on the Saudi Stock Exchange (Tadawul) in Riyadh, saying it is expected to commence after all relevant legal requirements and procedures have been completed. “An announcement of the commencement of trading of the shares will be made on Tadawul’s website,” the firm said.
The stabilisation period will start on the day shares begin trading on the Tadawul, and end within 30 days of the trading commencement date.