Saudi Arabia stems Aramco IPO gusher

Saudi Arabia set a valuation target for Aramco’s initial public offering well below Crown Prince Mohammed bin Salman’s goal of $2 trillion and pared back the size of the sale to ensure the world’s largest oil producer successfully lists on the Riyadh stock exchange next month.

The Saudi central bank also relaxed lending limits to boost demand from local investors after bankers were unable to convince many international money managers of the merits of the deal.

Aramco will sell just 1.5 percent of its shares on the local stock exchange, about half the amount that had been considered, and seek a valuation of between $1.6 trillion and $1.71 trillion.

While that would allow Aramco to overtake Apple as the world’s biggest public company by some distance, the plans are a long way from Prince Mohammed’s initial aims: a local and international listing to raise as much as $100 billion for the kingdom's sovereign wealth fund.

At the lower end of the price range, the offer would fall short of a record, coming in just below the $25 billion Alibaba raised in 2014.

The lackluster response from investors outside the kingdom meant Aramco decided shares won’t be marketed in the US and Canada as originally planned. But bankers said they were confident that there was more than enough local demand to ensure the deal’s success.