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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