Saudi Aramco exceeds target as retail subscriptions end
Subscriptions and bids for Saudi Aramco’s initial public offering reached 166.03 billion Saudi riyals (Dh162.57bn) by Friday, exceeding its target of 96bn riyals, according to lead arrangers Samba Capital and NCB Capital.
In the first 12 days, institutional bids reached 118bn riyals at 5pm Saudi time on Friday, with book-building set to close on Wednesday.
More than half, or 54 per cent, of institutional bids came from
Saudi corporate investors, with Saudi funds, DPMs (Discretionary Portfolio Managers) and authorised peoples accounting for 24.1 per cent. Saudi government-related entities accounted for 11.1 per cent, with non-Saudi investors, including those from the GCC, qualified investors and swaps accounting for 10.5 per cent.
Retail subscriptions reached 47bn riyals, or 1,481,613,280 shares.
The high subscription rates from retail investors were an indication of success and a “signal of confidence” in a company that has “unrivalled standing globally in the energy sector”, said Samba Capital deputy chairwoman Rania Nashar.
Aramco is the most profitable commercial entity in the world, beating the likes of Apple, Google and Amazon. It recorded a $68bn profit for the first nine months of the year on revenue of $217.1bn. A debut $12bn bond issued by the company in April was more than 10 times oversubscribed.
The oil giant, which has one of the highest revenue streams in the world, accounts for one in every eight barrels of crude. In 2018, the company produced 13.6 million barrels per day of oil equivalent, including 10.3 million bpd of crude.
Aramco began the much-anticipated IPO process on November 3. It set a price range of 30-32 riyals per share, giving the company an indicative valuation of $1.6 trillion to $1.7tn. The final price is set to be announced on Thursday, after bids from institutional investors close.
“The success of the retail tranche is mirrored in the institutional tranche where bids reflect strong demand coming from across the spectrum of investor categories, reflective of Aramco’s compelling investment proposition,” said NCB Capital chief executive Sarah Al Suhaimi. “This institutional demand also speaks well to the depth and diversification of the Saudi capital markets and its investor base,” she added.
A note on the Aramco IPO published by Dubai fund manager Dalma Capital stated that once floated, Aramco would comprise between 9.3 per cent to 9.9 per cent of the Tadawul All-Share index. It is likely to attract foreign inflows of $3.2bn to $3.4bn from funds tracking the MSCI and FTSE Russell indexes.
People check an announcement on Aramco’s public offering on an investment services website in Riyadh