Saudi Aramco to mark the largest initial public offering in history

on Dec 5, 2019
Updated: Mar 11, 2020
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  • Saudi Aramco valued its shares at $8.53 (32 riyals per share) in its initial public offering.
  • Raising $25.6 billion, Aramco overtook Alibaba and marked the biggest IPO in history.
  • At $1.7 trillion market value, it overtook Apple Inc. to become the most valuable publicly traded firm.
  • Aramco is planning on opting for 15% greenshoe that will value the listing at $29.4 billion.

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The national petroleum and natural gas company of Saudi Arabia, Saudi Aramco, is all set to win the title of the biggest initial public offering (IPO) in history. Crown Prince Mohammed bin Salman had previously expressed his desire to value the IPO at $2 trillion. As per the experts, however, despite being the biggest IPO in history, the state-owned oil giant is likely to fall significantly short of $2 trillion.

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Aramco Valued Its Shares At $8.53, Raising $25.6 Billion In Total

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As
per the sources, Aramco valued its shares at $8.53 (32 riyals per share) in its
initial public offering. In 2014, Alibaba’s IPO in the United States of America
had seen its shares priced at $68 that helped the Chinese multinational
conglomerate to raise $25 billion, making it the biggest IPO in history. Saudi
Aramco, however, has raised $25.6 billion to steal the title of the biggest IPO
ever for itself.

The
IPO further highlights that the Saudi oil giant is currently valued at $1.7
trillion, making it the world’s most valuable firm that is publicly available
to trade. Aramco’s IPO has effectively put an end to Apple’s streak of keeping
the title of the most valuable listed firm across the globe to itself. The
company is expected to be listed on the Riyadh stock exchange later in
December.

Even
at $1.7 trillion, Aramco was unable to invoke
enthusiasm for foreign investments
. Consequently, it relied on domestic and
regional investments to realize its goal of selling 1.5% of a total of 200 billion
shares. According to the experts, political risks, concerns of climate change,
and lack of confidence in corporate transparency were the prominent reasons why
foreign investors remained passive in Saudi Aramco’s IPO. No official statement
has been released so far that highlights where does Saudi Arabia plan on
listing the oil company abroad and when can it be expected.

Aramco
May Also Opt For 15% Greenshoe

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Earlier
this month, sources had also reported that Aramco is planning on opting for 15%
greenshoe that, according to an estimate, will value the listing at $29.4
billion. Aramco’s representative has refused to comment at this stage. A formal
announcement regarding the IPO will be made later this week on Thursday, as per
the sources.

The
Organization of the Petroleum Exporting Countries (OPEC) held meetings throughout
this week. In an event that it succeeds in closing a deal with prominent allies
like Russia, oil
supply in the upcoming weeks
can be expected to be curtailed further. The supply
cut is aimed at supporting global oil prices.

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