SUMMARY: Saudi Aramco Nails $25.6B IPO Valuation


The Kingdom of Saudi Arabia has completed the world’s largest initial public offering for the Aramco state oil company. The offering raised $25.6 billion selling 3 billion shares  at 32 riyals or at US$8.53, according to the company.

The IPO valued the company at $1.7 trillion dollars, shy of the $2 trillion desired by the Saudi royalty. Local institutional investor interest caused the deal to be oversubscribed by a factor of five.

The IPO will take place on the Tadawal Exchange in the coming days.

And the IPO can be increased as Aramco has the ability to issue an additional 450 million shares under the terms of a “purchase option” agreed with the investment banks advising on the deal. That would make the final deal size as much as $29.4 billion.

According to the Arab News, 2/3rds of the IPO has been taken up by institutions, and the rest by private investors in Saudi Arabia and other GCC states.

Aramco marketed the IPO only in the Arabian Gulf following a decision not to make “road show” trips to big Western financial centers. Advisers were confident there was sufficient demand in the Middle East, but the Saudi government has the option to sell further shares in the future to foreign investors or on a foreign stock exchange.

The Arab News quoted one Middle East financier for an Asian institution: “So far so good for the Saudis. There may be some foreign and sovereign investors named in the next few days, which will be interesting.”

Trading in the shares will take place after legal and procedural requirements are completed on Dec. 12.