Saudi Aramco set to begin trading on Saudi Stock Exchange

Matthew Amlôt, Al Arabiya English

Saudi Aramco is set to begin trading on the Saudi Stock Exchange (Tadawul) on Wednesday under the symbol 2222 as part of the final stage of its blockbuster initial public offering (IPO).

Trading on the Tadawul will allow those that bought shares in Aramco during the IPO process to sell, and allow others to buy.

The stock is subject to a 10 percent fluctuation limit, meaning that it could trade as high as 35.2 riyals ($9.39) and can go no lower than 28.8 riyals ($7.68).

During the first day of trading, the opening auction for Aramco will be extended by 30 minutes, the Tadawul said in a statement. The auction begins at 9:30 a.m. and ends 10:30 am local time.

The auction process allows traders to place orders prior to the market opening and can help determine the price once trading starts.

Aramco’s shares will then begin trading at 10:30 a.m. and will end at the Tadawul’s normal market close time of 3:00 p.m.

The energy giant is offering 1.5 percent, or three billion, of the company’s shares on the Tadawul. The price was set at the high end of its indicative range at 32 riyals per share, valuing the company at $1.7 trillion and raising $25.6 billion from the IPO process – making it the largest IPO in history

Non-Saudi Arabian investors in the IPO have been allocated 23.1 percent of the institutional portion of the IPO, according to Samba Capital, a lead manager in the process.

The Kingdom’s government institutions were allocated 13.2 percent of the institutional tranche, while Saudi corporates got the biggest percentage of the allocations at 37.5 percent, the bank said.

The institutional tranche ended 6.2 times oversubscribed with a value of 397 billion riyals ($105.86 billion), it added.

The retail tranche, meanwhile, ended 1.48 times oversubscribed with around 47.4 billion riyals ($12.64 billion) in orders.

On Monday, a senior banker said the proceeds from the IPO could rise to $29.4 billion should the oil giant exercise an option to sell 15 percent more stock.

The banker said the so-called greenshoe option – a provision that grants the underwriter the right to sell more shares – could be implemented.

The unprecedented size of the Aramco IPO risks sucking the liquidity on the Tadawul, but will attract more capital to the Gulf’s largest market in the medium-term.

The inclusion would lead to the TASI – the main index - outperforming other developing countries in terms of profitability and shareholder returns, Aljazira Capital analysts wrote in a research note.

Oil prices could become a key driver of stocks, as it contributes “significantly” to Saudi Aramco’s overall financial performance, the analysts said.
 

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FAQ's

Saudi Aramco is the Kingdom’s state-owned energy company and the world’s biggest oil producer. In November, the company reported a profit of $68 billion for the first nine months of 2019 – making it the most profitable company in the world.
An initial public offering (IPO) is the process by which a company sells a portion of its ownership (shares) to public investors to raise funds (also known as capital). The company sells its shares by listing them on a public stock exchange, where investors can purchase them.
"I am honored to announce that Saudi Aramco will become a listed company on the Saudi Stock Exchange,” Chairman Yassir al-Rumayyan said in early November. The exact percentage of the company and the possibility of another listing on a foreign exchange are both still unknown details, however.
Senior Saudi Arabian authorities have targeted a $2 trillion valuation. At this valuation, a 5 percent listing would raise $100 billion in funds – dwarfing any other IPO in history. However, some analysts and investment banks have predicted a range closer to between $1.2 and $1.5 trillion.
The IPO prospectus is expected to be released on November 10, with pricing expected November 17. Meanwhile, the float is expected to take place on December 4, followed by trading on December 11.
The IPO is part of Saudi Arabia’s overall strategy to transition into a post-hydrocarbon age. The income generated would be funneled into the Public Investment Fund (PIF), the Kingdom’s sovereign wealth fund (SWF). Saudi Arabia’s Vision 2030 plans to transform the PIF into a giant investment vehicle to help the country diversify its economy and reduce its reliance on oil revenues.
Saudi Vision 2030 is the Kingdom’s ambitious plan to diversify its economy by reducing dependence on oil and developing non-oil sectors ranging from healthcare to mining. The IPO is seen as a cornerstone of Vision 2030, boosting the PIF as the long-term investment vehicle for the Kingdom.

Saudi Arabia’s Crown Prince Mohammed bin Salman

- The Crown Prince is the architect of Vision 2030 and originally announced plans to list shares of Saudi Aramco in 2016.

Prince Abdulaziz bin Salman, Saudi Arabia’s Energy Minister

- Prince Abdulaziz assumed the role of energy minister in September of this year, replacing Khalid al-Falih.

Yasir al-Rumayyan, Chairman, Aramco

- Al-Rumayyan became chairman of Aramco’s board in September. He is best known as governor of the PIF, a role he continues to hold.

Amin Nasser, President and CEO, Aramco

- Nasser has been with Aramco for more than three decades and has held numerous leadership positions.