Aramco IPO retail subscription fully covered, $8.69 bln in orders: Samba Capital

Matthew Amlôt, Al Arabiya English

Retail subscriptions for Saudi Aramco’s initial public offering (IPO) have so far reached 32.6 billion riyals ($8.69 billion) by Wednesday evening.

The retail portion of the sale had attracted 3.7 million people by Wednesday night, according to Samba Capital, the lead manager of the IPO, with 1,017,816,380 shares sold, meaning the retail portion of Saudi Aramco’s IPO has been fully covered at 102 percent.

The last day of the retail subscription period is November 28; the IPO began on November 3.

Aramco is offering 1.5 percent of the company’s shares on the Saudi Stock Exchange (Tadawul) at an indicative price range of 30-32 riyals ($8-$8.53). A third of those shares, 0.5 percent, is allocated to retail, or individual investors.

RELATED: Saudi Aramco’s IPO set to value oil giant at nearly $1.7 trillion

The higher end of the share price would raise as much as $25.6 billion from the IPO, putting the market value of the oil giant between $1.6 trillion and $1.7 trillion, below the government’s anticipated value of $2 trillion.

Banks in Saudi Arabia have been directed to lend to retail customers at a ratio of 2 to 1 for every riyal invested towards buying Aramco’s shares.

Aramco is expected to announce the final price for the offering on December 5.

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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.