Saudi Aramco opts for over-allotment to sell an additional 450 million shares

As of Sunday, state-owned Saudi
Aramco oil company announced that it has opted for over-allotment that puts an
additional 450 million of the company shares on sale. With the greenshoe
option, Saudi Aramco’s initial public offering (IPO) has now hit the record
$29.4 billion.

Saudi
Aramco had printed a record $25.6 billion IPO in December. The company had
sold 3 billion shares at $8.53 (32 Riyals) per share. Aramco’s representatives,
however, had hinted that the company may opt for over-allotment with the start
of the new year.

According to Refinitiv data, share
prices were seen higher at 35 Riyals immediately after the market open.

Over Allotment Enables Companies To
Sell More Shares If Demand Is Higher

The over allotment option that is
also widely known as the greenshoe option enables companies to offer a much larger
number of shares in its initial public opening if it sees a significantly greater
demand than expected. As per Saudi Aramco, the additional shares were allocated
to the investors during book-building. The company also commented:

“No additional shares are being
offered into the market today and the stabilizing manager will not hold any
shares in the company as a result of the exercise of the overallotment option.”

Following the U.S overnight strike
on Iran that killed its militia leader, General Qasem Soleimani in Iraq, the
rising tension has had an adverse impact on Saudi Aramco in the stock market. The
complications stirred volatility in the share prices which were reported
trading around 34 Riyals on Wednesday that marked the lowest level for the
stock since its IPO on December 11^th. As of Thursday, however, the
stock was reported to have regained to 35 Riyals.

Saudi Aramco Is Valued At $1.87
Trillion As Of Thursday

Thursday’s stock price of 35 Riyals brands
the state-owned oil company with a market value of $1.87 trillion. While the
market capitalization represents a value higher than that of the IPO, it is
still below the $2 trillion mark that the Saudi Crown Prince Mohammed bin Salman
had originally envisioned.

Nonetheless, Saudi Aramco, as per
Bloomberg, is currently the largest company by market value across the globe.