Saudi Aramco plans USD25.6B share sale in biggest ever IPO

DUBAI, UNITED ARAB EMIRATES (AP) — Saudi Arabia’s state-owned oil company Aramco on Thursday set a share price for its IPO — expected to be the biggest ever — that puts the value of the company at USD1.7 trillion, more than Apple or Microsoft. The company said it will sell its shares at SAR32 (USD8.53) each, putting the overall value of the stake being sold at USD25.6 billion. That surpasses IPO record holder Alibaba Group Holding Ltd, the Chinese conglomerate and e-commerce company that raised about USD25 billion in 2014.

Aramco, which pumps and produces Saudi Arabia’s crude oil to the world, is floating a 1.5 per cent stake in the company, or 3 billion shares. Trading is expected to happen on the Saudi Tadawul stock exchange by mid-December.

The company is selling a 0.5 per cent stake to individual investors, who are Saudi citizens and residents of Saudi Arabia, and one per cent to institutional investors, which can be sovereign wealth funds, asset managers and government-run pension programmes.

The IPO price is at the top of the range that Aramco had sought. It had been looking for between SAR30 to SAR32 each, or USD8 to USD8.53 a share.

Aramco said on Thursday the offering drew heavy demand.

A man walks past a compound for Saudi Aramco in Jeddah, Saudi Arabia. PHOTO: AP

Its financial advisers had said earlier that most orders were coming from Saudi funds or companies, with foreign investors accounting for only 10.5 per cent of the bids. It was not immediately known what the final breakdown was.

The sale of a sliver of the oil behemoth generated global buzz since Crown Prince Mohammed bin Salman first announced plans for it more than two years ago.

The kingdom’s plan to sell part of the company is part of a wider economic overhaul aimed at raising new streams of revenue for the oil-dependent country.

This as oil prices struggle to reach the USD75 to USD80 per barrel price range that analysts say is needed to balance Saudi Arabia’s budget. Brent crude is trading at just over USD63 a barrel.

Prince Mohammed has said listing Aramco is one way for the kingdom to raise capital for the country’s sovereign wealth fund, which would then use that money to develop new cities and lucrative projects across Saudi Arabia.

Despite the mammoth figures involved in the IPO, they are not quite what the Crown Prince had envisioned based on his own remarks over the past two years.

He’d previously talked about a valuation for Aramco of USD2 trillion and a flotation of five per cent of the company involving a listing on a foreign stock exchange. There are no immediate plans for an international listing. Aramco said on Thursday it would retain the option of an even bigger offering of a 3.45 billion share sale, representing USD29.4 billion.