Saudi Arabia doubles lending limit for Aramco IPO retail investors: Samba CEO

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Saudi Arabia’s central bank, the Saudi Arabian Monetary Authority (SAMA), has doubled leverage limits for retail investors looking to buy shares in oil giant Saudi Aramco, Samba Financial Group’s Chief Executive Officer Rania Nashar told Al Arabiya.

Banks in the Kingdom have been directed to lend to retail customers at a ratio of 2 to 1 for every riyal invested towards buying Aramco’s shares during the company's upcoming initial public offering (IPO), up from the average limit of 1 to 1, Nashar told Al Arabiya.

The move means that more Saudi Arabian retail citizens will be able to invest in Aramco, helping boost the success of the IPO.

The banks will also be allowed to lend to corporate and institutional customers at higher leverage ratios based on each customer’s creditworthiness, she said.

“The IPO is unprecedented - SAMA and the Kingdom’s Capital Market Authority, along with banks and investment companies have worked very hard throughout this period,” Nashar said, adding that banks are extending their hours to ensure that electronic systems are running smoothly in preparation for the IPO.

Saudi Aramco plans to offer 1.5 percent of its shares in the upcoming IPO on the Saudi Stock Exchange (Tadawul).

Analysts earlier told Al Arabiya English that the much-anticipated IPO is set to see overwhelming investor appetite from retail investors, which will be able to subscribe to 0.5 percent of shares.

The company has set an indicative price range of 30-32 riyals per share ($8-8.53), which would value the oil giant at $1.6 to $1.7 trillion. The final price for the offering is expected to be announced on December 5.

Based on the IPO prospectus, Saudi Arabian retail investors that hold their shares for a minimum of 180 days, or six months, would be eligible for a 10 percent discount through the allocation of additional bonus shares.

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