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05 December 2019
INVESTMENT

Saudi Aramco mulls pricing at top to become world’s biggest IPO

The state-owned oil company wants to ensure that it can still show strong performance in the first few days of trading even if it prices at the top end.

Bloomberg/Mohammed Al-Nemer


Saudi Aramco is considering pricing its initial public offering (IPO) at the top end of a marketed range, which would make it the world’s biggest-ever new listing, reported Bloomberg.

The Gulf energy giant has discussed pricing its IPO shares at SAR 32 apiece, after marketing them at SAR 30 to 32 each. Many local fund managers placed orders at that level under the assumption strong domestic demand will lead the deal to price at the top.

Saudi Arabia is selling a 1.5 per cent stake in the state oil producer through the offering. The deal would raise $25.6 billion if it prices at the top end, surpassing Chinese internet giant Alibaba Group Holding’s $25 billion US share sale in 2014 as the largest IPO of all time.

The top end of the IPO price range values the company at $1.71 trillion. Saudi Aramco has not formally set the final price and it could change depending on the final order levels.

According to the IPO prospectus, Saudi Aramco is expected to announce the final price on 5 December 2019. Saudi banks have been offering easy loans to retail investors to bid for shares in Saudi Aramco, the crown jewel of the Kingdom’s economy and the world's most profitable company.

Saudi Automotive Services Company said that it is raising SAR 190 million ($50.67 million) in debt to invest in the IPO of Saudi Aramco. The firm said that the loan proceeds will help diversify its investments by subscribing to the Saudi energy giant's shares.

Some Saudi financial institutions have offered loans at four times their usual limits and others have set no ceiling on the amount clients deemed creditworthy could borrow to raise funds for the IPO.

 

 


RELATED STORIES: Saudi Aramco IPO Saudi banks


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