Connect with us

Business

Saudi Aramco raises $25.6 billion in world’s largest IPO

Published

on

$41.9bn worth of oil stolen from Nigeria – NEITI

Saudi Arabian national petroleum and natural gas company, Saudi Aramco, has successfully completed its Initial Public Offering (IPO), where it raised a record $25.6 billion (£19.4bn) from investors.

The share sale dwarfed that of China-based online retailer Alibaba which, in September 2014, raised $25 billion, the biggest in history as of that time.

The book-building process, preceding the exercise proper, priced the state-owned firm’s IPO at 32 riyals ($8.53) per share – the top of its range.

Saudi Aramco chose to cast its glance inwards at local and domestic investors following investment apathy towards the company’s public offer from abroad. The $25.6 billion, representing 1.5% stake of Aramco’s valuation, nevertheless fell short of the ambitious target of the Crown Prince Mohammed bin Salman.

He had hoped to raise, by way of the capital-raising exercise, the value of the state asset to $2 trillion and, in so doing, scale down the heavy reliance of the Arab nation’s economy on oil to the barest minimum and modernise it, but got $1.7 trillion instead. The prince, through its vision 2030, is seeking an enormous outlay running into billions of dollars to bankroll several megaprojects that will transform and diversify the kingdom’s economy holistically.

Read also: Electricity tariffs to rise as Nigerian govt launches new power policy

The listing will earn Aramco the formidable reputation of world’s most valuable listed company, easily keeping Apple, currently valued at $1.17 trillion, in the rear view mirror. It is indeed the latest addition to the firm’s avalanche of laurels among which is its current status as the world’s most profitable company.

The consummation of the debut public offering Thursday was a watershed moment for Aramco, the exercise has faced several hitches and back and forth since the idea was mooted in 2016.

It set out to raise up to $100 billion (5% of its stake) from the local Riyadh’s Tadawul Stock Exchange and an overseas exchange speculated to be the London Stock Exchange. But it ditched the plan on the grounds that international investors expressed fears over climate change, political risk and absence of corporate transparency. The scepticism of international institutional investors, regarding the valuation of the company, compelled Aramco to call off marketing roadshows in London and New York.

To buffer this, marketing efforts were concentrated on local investors with government calling on Middle Eastern investors and the deep-pocketed in the Saudi population to support the IPO. Towards this end, local banks extended cheap credit liberally to interested investors after a nationwide advertising campaign.

Aramco’s shares were nearly three times oversubscribed according to reports. The oil firm is said to hold the world’s second-largest proven crude oil reserves at over 270 billion barrels and has the second-largest daily oil production.

 

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now