Thursday, Jan 23, 2020
International Finance
Oil and Gas

Aramco raises $25.6 bn in IPO with shares priced at $8.53

Aramco IPO
Aramco is expected to achieve a valuation of $1.7 trillion

Saudi Aramco has raised $25.6 billion in its initial public offering, according to media reports. Aramco sold its shares on Riyadh Stock Exchange at $8.53 per share and the shares were oversubscribed. With that, the company is expected to reach valuation of $1.7 trillion, establishing it as the biggest company ever. 

The money raised by Aramco exceeds Chinese ecommerce Alibaba’s record in 2014. S&P said in a note on Saudi Aramco’s IPO, “We understand that the bulk of the funds raised will go to the government or the Public Investment Fund, potentially adding to the sovereign’s already strong fiscal net asset position of 72.7 percent of gross domestic product.” 

The Kingdom of Saudi Arabia hired some of the biggest banks to advise on the IPO. According to media reports, some of the banks had suggested that Aramco sell its shares at a cheaper price to ensure they trade higher following its debut. 

The share sale is vital to Crown Prince Mohammed bin Salman’s plans to diversify the economy and introduce further improvisations. The Kingdom requires tens of billions of dollars to fund megaprojects and develop new industries, according to media reports. 

Initially, Aramco planned to raise $100 billion on the Kingdom’s Tadawul and the London Stock Exchange. The Kingdom decided the share pricing following its discussions with Russia and the other members of the opec regarding oil production. The meeting was held in Vienna. 

A PwC partner Steve Drake expects the coming quarter to significantly improve with Aramco’s share listing on Tadawul. Other companies have also expressed interest to list on the exchange, he added. 

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