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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.
The shares were priced at 32 riyals (US$8.53), according to a statement. The initial public offering was 4.65 times oversubscribed, with most of the money coming from local investors. It received total bids of US$119 billion.
The company didn’t say when the shares will start trading in Riyadh.
The deal ended up being a very different one from what was originally envisaged. Aramco offered just 1.5 per cent of its shares and Saudi Arabia had to trim its ambitions after global investors balked at the kingdom’s hopes of valuing the company at US$2 trillion.
Instead, Aramco relied heavily on Saudi investors. In the retail offering, 4.9 million people applied for shares. The institutional tranche closed on Wednesday and attracted bids totalling 397 billion riyals.
The kingdom’s richest families, some of whom had members detained in Riyadh’s Ritz-Carlton hotel during a so-called corruption crackdown in 2017, are expected to have made significant contributions to the IPO. Global banks working on the deal were sidelined after Saudi Arabia decided to focus on selling the shares to local and regional investors.
Still, Aramco will become the world’s most valuable publicly traded company once it starts trading, overtaking Microsoft Corp and Apple Inc.
Saudi Arabia had been pulling out all the stops to ensure the IPO is a success. It cut the tax rate for Aramco three times, promised the world’s largest dividend and offered bonus shares for retail investors who keep hold of the stock.
Proceeds from the IPO will be transferred to the Public Investment Fund, which has been making a number of bold investments, plowing US$45 billion into SoftBank Corp.’s Vision Fund, taking a US$3.5-billion stake in Uber Technologies Inc. and planning a US$500-billion futuristic city.
Bloomberg.com
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