Saudi Aramco public share sale is world’s largest

SAUDI Aramco has raised US$25.6bn in its initial public offering (IPO), making it the world’s largest public share sale.

Saudi Aramco valued the company on 5 December at US$1.7trn, which was at the high end of the range of potential valuations. The sale of the 1.5% stake raised US$25.6bn. The valuation falls short of the US$2trn sought by Crown Prince Mohammed bin Salman when the plans for the IPO were first announced in 2016. He had also hoped for a 5% sale share, which would have raised US$100bn.

A strong demand for shares led to them being oversubscribed, and it is possible that an over-allotment option could be used to allow an extra 450m shares to be bought, which would increase the total funds raised to US$29.4bn. The IPO was only marketed in the Arabian Gulf after the high valuation failed to gain support from potential international investors. According to The Wall Street Journal, 31 global investors with US$3.8trn in assets would give Aramco a mean valuation of US$1.26trn, based on a poll by Bernstein Research.

An international share sale was part of the original plan for the IPO and may still happen at a later date. According to the BBC, the decision to a proceed with an international IPO will be one of the biggest challenges facing Aramco, due to the risks involved, such as the falling demand for crude, and potential investors being deterred by the climate crisis and geopolitical risks.

The shares are due to start trading on Saudi Arabia’s Tadawul stock exchange on 11 December, according to The Wall Street Journal.

The previous record holder for the world’s largest IPO was Chinese firm Alibaba which sold US$25bn in shares.