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

Written by: Damian Wood
March 11, 2020
  • Aramco’s Institutional subscriptions hit $15.5 billion with five days
  • Retail subscriptions stood at $3.9 billion with the same period
  • The oil giant is looking to raise up to $25.6 billion

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.

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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.