An Aramco oil tank is seen at the Production facility at Saudi Aramco’s Shaybah oilfield in the Empty Quarter, Saudi Arabia.
Ahmed Jadallah | Reuters
DUBAI — Saudi Arabian Oil Company, or Saudi Aramco, has priced its shares at the top of its indicative range for its initial public offering (IPO), Reuters reported Thursday citing three sources familiar with the decision.
The shares have been priced at 32 riyals ($8.53), with a formal announcement expected later on Thursday, according to the news agency. This means it is set to raise $25.6 billion and will likely beat Alibaba to be the world’s largest ever stock market flotation.
The long-awaited IPO of the world’s largest and most profitable company will list locally on the Tadawul, Saudi Arabia’s stock exchange, and forms the centerpiece of Crown Prince Mohammed bin Salman’s Vision 2030 aimed at transforming the Saudi economy.
The pricing announcement will follow a-week long local roadshow around the Middle East that saw Aramco’s local listing oversubscribed by nearly three times, attracting offers worth 189.04 billion riyals ($50.4 billion), according to banks advising the listing. Institutional investors had between Nov. 17 and Dec. 4 to place their orders.
Aramco has said in the past that 0.5% of its listed shares would be available to individual retail buyers, while the remaining 1% would be for institutional investors. That 1% is equivalent to 2 billion shares. In the first two and a half weeks of Aramco’s bookbuilding period, it drew subscription orders for 5.9 billion shares.
Gulf allies in the United Arab Emirates and Kuwait have made substantial commitments to the Saudi project, with the Kuwait Investment Authority and Abu Dhabi reportedly investing up to $1 billion and $1.5 billion in the public offering, respectively, though they have not commented publicly on the matter.
Samba Capital, one of Aramco’s advisors, said in a statement that 10.5% of the offers came from foreign investors, while most were from Saudi funds and companies. Saudi Arabia has also turned to wealthy local families and Saudi billionaires to drum up support for the listing, according to reports.
The oil giant had delayed its IPO, originally scheduled for 2018, reportedly over Saudi concerns about public scrutiny of its finances and because of the complexity of its corporate structure. The crown prince initially touted a valuation of as high as $2 trillion, a figure that was brought down in recent months as financial advisors estimated a valuation closer to $1.5 trillion.
Ahead of the listing, Aramco detailed the vast number of risks its oil and gas business faces in a prospectus released in early November.
More obvious risks include the supply, demand and price of crude oil or how much oil the Saudi government decides to produce, as the country is the largest producer in OPEC.
Security risks remain high on that list — Aramco’s oil production was hit by drone attacks in September, which forced Riyadh to cut production by 50%. It took weeks for the Saudi government to restore capacity. Other risks include climate change and the company’s dependence on demand from Asia, its prospectus said.
