Aramco’s institutional investment more than doubles ahead of tomorrow’s deadline

Damian Wood
  • December 3rd 2019, 09:33
  • Saudi Aramco IPO nets more than twice the planned institutional investment
  • As of yesterday, Institutional investors had invested about 144.1 billion riyals ($38.4 billion)
  • its IPO subscription window closes tomorrow

Saudi Aramco has done it again – just last week, the state-owned oil company closed its retail investment slots having received slightly more than 1.7 times more investment than the anticipated amount.

But yesterday, the oil giant’s subscription went through the roof as it recorded 144.1 billion riyals ($38.4 billion) worth of bids for its Initial Public Offering under the institutional investors’ slots. The amount equates to more than 200% of the number of shares for sales to institutional investors, the IPO’s fund managers said on Monday.

Aramco set out to sell a 1.5% share of the company for $25.6 billion. The underwriting process began last month with an allocation of shares to institutional investors essentially made up of asset managers, insurers and pension funds. The last day for subscribing to the company’s shares is Dec. 4.

As per a report issued by Aramco, NCB Capital, HSBC, and Samba Capital, as of yesterday, the company had received subscribers under the institutional category for about 4.6 billion shares.

But while the investment has more than doubled, as the 5th December deadline approaches, things have been quieting down. A few companies in the past have had more successful IPOs in the kingdom including the Saudi Bank one, that was oversubscribed to by more than 10 billion investors.

Aramco’s IPO is set to be the world’s biggest listing, after Alibaba’s $25 billion IPO in 2014.

While a proper breakdown about the institutional numbers hasn’t been availed by the IPO’s underwriters, last week Samba Capital noted that a substantial amount of the netted investment came from local companies and about 10.5% from foreign investors.

Aramco’s retail tranche closed last Friday having received bids worth 47.4 billion riyals, which accounts for approximately 1.5 times the number of shares issued.

The Saudi government last week decided to scale down its IPO campaigns across the city and instead focus on approaching individual institutional investors drawn from the wealthy Gulf Arab allies.

Aramco is yet to disclose when and where it will list internationally.

About the author

Damian Wood
Damian Wood
As an experienced trader, I work for myself managing my own small portfolio and also contributing on several investment news sites. I mix my passion for the industry and journalism to bring my readers informative and trustworthy articles.

Leave a Reply

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.