Saudi Aramco Sets World Record in IPO
OREANDA-NEWS. According to The Financial Times, citing its sources, in the initial public offering (IPO), the Saudi Arabian Oil Company (Saudi Aramco) will be able to attract 25.6 billion US dollars from investors, setting a new record. Thus, a company will surpass the rate achieved by Alibaba in 2014, when the Chinese retailer received 25 billion dollars during the offering of its shares on the New York Stock Exchange.
Reuters agency notes that Saudi Aramco managed to conduct an IPO along the upper border of the designated price range, selling shares at 32 Saudi rials (8.53 dollars). As a result, Saudi Aramco’s market price reached 1.7 trillion dollars, which made it the most expensive public company in the world.
For the first time, plans to bring Saudi Aramco to IPO became known in 2016 from the words of Crown Prince Mohammad bin Salman. However, the preparation of the offering ceased in 2018 at the insistence of the King of Saudi Arabia, Salman bin Abdulaziz Al Saud. Reuters sources reported that the monarch was convinced by family members, major bankers and oil companies, who said that the IPO would negatively affect the country. Preparation for the IPO resumed in the summer of 2019.
Initially, Prince Mohammed bin Salman announced that he was counting on capitalization of 2 trillion dollars after IPO. However, the estimates of the largest banks were less. Bank of America considered that under the worst-case scenario, capitalization could reach 1.22 trillion dollars. As a result, the estimated cost of the company was reduced by Riyadh, and on November 17, Saudi Aramco set the price range for its listing from 1.6 trillion to 1.7 trillion dollars. The company puts up for sale 1.5 % of its shares.On November 2, Bloomberg agency, citing sources, reported that Prince Mohammad bin Salman gave a consent to the IPO. The next day, the Board of Directors of the Capital Markets Authority of Saudi Arabia approved the application of Saudi Aramco.