Aramco raises $25.6bn in world’s largest IPO, beats Alibaba’s 2014 record

Saudi Aramco

Saudi Arabia’s state-controlled oil firm, Aramco, has raised $25.6 billion in the largest Initial Public Offering (IPO) ever, putting the value of the company at $1.7 trillion, higher than Apple ($1.2 trillion), Microsoft and Alibaba ($1.1 trillion)

The IPO values Aramco at roughly $1.7 trillion, making it the most valuable publicly traded company in the world ahead of Apple which is worth about $1.15 trillion. This, however, fell short of the   $2 trillion mark set by Crown Prince Mohammed Bin Salman.

The oil-giant, Aramco will begin the trading of 3 billion units of shares on the 12th December, on the local Tadawul Stock Exchange at a starting price of $8.53.

There are reports that most of the new shareholders are mostly Saudis and regional investors, as investors around the world have remained unsure about investing in the state-controlled oil firm due to concerns around transparency, governance practices, security and targeted valuation, as well as profitability in the face of harsh environmental policies around the world.

According to reports, the government could decide to increase the number of shares on offer by a further 15 percent of the IPO via what the investment bank adviser calls the “green shoe” mechanism, designed to ensure price stability when the shares start trading.

Saudi citizens were by far the biggest number of applicants, with 4.95 million seeking to buy into the IPO. But there was also significant demand from expats resident in the Kingdom, with more than 106,000 applying for shares

Aramco has promised to pay an annual dividend of $75 billion through 2024. To some investors, this could make the listing look more like a bond offering with promised payouts and lower risk. Aramco’s stock is expected to begin trading on Tadawul Exchange in Riyadh later this month.

The massive stock exchange debut would fund Crown Prince Mohammed bin Salman’s Vision 2030 plan to wean the kingdom off oil and develop other sectors of its economy while signalling to multinational companies and foreign investors that Saudi Arabia was open for business.