Aramco retail offer closes as IPO bids hit $44.3 billion

Saudi’s oil giant Aramco has so far attracted 166 billion Saudi
riyals ($44.3 billion) through its Initial Public Offering. The bids are drawn
from retail and institutional investors, and the company has so far closed
deals amounting to 177% more than the initial target.

About 4.9 million investors placed bids in the retail category
even as bids closed last evening, raising an estimated 47.4 billion riyals. For
the institutional investors, the company extended the closure of the bids until
Wednesday next week perhaps to give room for significant investors who would
wish to come on board amid speculation of low interest from foreign institutional investors.

Samba Capital, one of the deal’s handlers said that institutional
investors have so far placed investments to the tune of 118.9 billion riyals of
shares, out of which only 10.5% belong to foreign investors.

The oil company had initially targeted a total of $25 billion from
its issue by giving away a 1.5% stake in the Saudi firm. Its regulators settled
on a valuation of between $1.6 to $1.7 trillion after downplaying the Crown Prince’s
initial valuation of $2 trillion.

Aramco’s plan was to allocated 1% of the issued 1.5% to institutional
investors and the remaining 0.5% to their retail counterparts. The company has
been conducting nationwide advertisements as well as providing attractive
financing options.

While a last-minute rush by institutional investors could be
experienced early next week, the much-hyped IPO hasn’t been as well subscribed
as a few past IPOs in the kingdom. One such IPO is 2014’s book for National
Commercial Bank that attracted 23 times more bids than the planned amount.

And about eight years before that, Emaar Properties PJSC, Middle
East’s largest property developer attracted about 10 million Saudi investors, approximately
half the kingdom’s adult population.

But all might not be lost for Aramco; the state company is still drumming
up support for its IPO from regional (institutional) investors. The company pitched
to Abu Dhabi investors earlier this week even as it looks to also reach out to Dubai
investors later next week.

Abu
Dhabi investors are said to be considering placing a $1.5-billion
investment in the oil firm, with Kuwait Investment Authority equally planning
to inject a substantial amount in Aramco’s IPO.