Saudi Aramco considers pricing at top to become worlds biggest IPO

Saudi Aramco considers pricing at top to become worlds biggest IPO

Saudi Aramco considers pricing at top to become worlds biggest IPO

Saudi Arabia relied on domestic and regional investors to sell a 1.5% stake after lukewarm interest from overseas, even at the reduced valuation of $1.7 trillion.

Saudi Aramco set the final price for its shares at the top end of the range, valuing the state-owned oil giant at US$1.7 trillion and making it the world's largest IPO.

For Crown Prince Mohammed Bin Salman, the sale could help restore credibility undermined by setbacks to his blueprint to overhaul the economy and a global reputation tarnished by the murder of Washington Post columnist Jamal Khashoggi and the war in Yemen.

The price of oil collapsed in mid 2014 and has yet to fully recover, leaving many Gulf economies under pressure.

It had initially sought to raise $100bn on two exchanges - with a first listing on the kingdom's Tadawul bourse, and then another on an overseas exchange such as the London Stock Exchange.

Aramco scrapped roadshows in NY and London after foreigners baulked at the valuation and raised concerns about corporate transparency.

Even at a $1.7 trillion valuation, global institutions baulked, prompting Aramco to scrap roadshows in NY and London and focus instead on marketing a 1.5% stake to Saudi investors and wealthy Gulf Arab allies.

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Shares went on sale on Thursday at 32 Saudi riyals ($8.53) each and were heavily oversubscribed, the firm said.

Saudi banks had offered citizens cheap credit to bid. Aramco declined to comment.

Saudi Arabia had been pulling out all the stops to ensure the IPO is a success.

Saudi Aramco's IPO generated subscriptions of $106 billion by institutional investors and, together with the total demand from individual investors, the order book hit $119 billion, the company said in the statement.

The kingdom's plan to sell part of the company is part of a wider economic overhaul aimed at raising new streams of revenue for the oil-dependent country. Many Western investors remain cautious, according to reports, due to the company's managing practices, as well as the ability of the group to protect its crucial oil facilities, AFP said, alluding to fears of possible recurrences of the 14 September drone attack on two Aramco oil plants that reduced the nation's oil production to almost a half for more than a week.

The Saudi government also stipulates oil production levels, which directly impacts Aramco's output.

According to the company, nearly 70 percent of Aramco's crude exports were delivered to customers in Asia past year, where demand is projected to rise more quickly. Among their concerns: Low oil prices, the climate crisis and geopolitical risks.

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