Aramco’s IPO subscription hits $19 billion within 5 days

Samba Capital
Vice-Chairman Rania Nashar confirmed on Thursday that retail and
institutional investors to Saudi Aramco’s Initial Public Offering (IPO) had
raised over $19 billion within the first five days of accepting subscriptions.

“Retail and
Institutional subscription levels for the first five days of the offering have
reached an unprecedented scale, demonstrating the confidence of investors in
Saudi Aramco, and we anticipate further increases in subscription levels during
the remainder of the offering period,” Nashar said in a statement.

Aramco has been
keen on attracting local investors using local fund managers. While it was largely
expected that the IPO will perform well, the final valuation of the company did
not sit well with the kingdom’s Crown Prince Mohammad bin Salman bin Abdulaziz Al Saud who is said
to have championed for a valuation of at least $2 trillion. However, international fund managers dismissed
the valuation as ‘too high’ perhaps forcing Saudi to go for a local
listing. Local and some international fund managers were happy to settle at a
valuation of $1.7 trillion.

But it seems the kingdom
will finally have the last laugh having already received billions from investors
in less than a week. Records indicate that the amounts received are as follows:
$15.5 billion for 1.8 billion institutional shares and $3.9 billion representing
465 million retail shares, totaling to about 2.2 billion issued shares within
five days.

Earlier communication
indicated that Aramco would be issuing a total of 3 billion shares, meaning only
about a third of the issued shares remain unsubscribed. But from what we’ve
seen, you can expect the remaining shares to be fully subscribed within the
next day or two.

Once the shares
are fully issued, the Saudi government, the sole owner of the oil giant will
surrender a 1.5% stake in the corporation. Given the colossal valuation of the
company, the forfeited stake is merely a drop in the ocean.

According to
sources to the company, a section of the collected funds will go towards setting
a “smart city” called Neom. The project was officially launched
by the Crown Prince and local contractors have already been dispatched to
commence the work.