Topline: Saudi Arabia’s state oil company, Saudi Aramco, is forging ahead with the world’s largest initial public offering, pricing its shares at the top of its indicative range with a $1.7 trillion valuation, overtaking behemoths like Apple and Microsoft for the title of the world’s largest company, Reuters first reported on Thursday.
- Aramco priced its IPO at $8.53 per share, the top of its indicative range, meaning that it is set to raise $25.6 billion in the world’s largest ever public offering—eclipsing e-commerce giant Alibaba’s record $25 billion listing in 2014.
- The world’s largest and most profitable company, Aramco is expected to list its shares on Saudi Arabia’s local stock exchange, the Tadawul, later this month.
- The share pricing would give Aramco a market valuation of $1.7 trillion, which is still short of the $2 trillion valuation sought by Crown Prince Mohammed bin Salman—but more than enough to overtake companies like Apple, worth $1.17 trillion, and Microsoft, worth $1.14 trillion.
- Saudi Arabia sold a 1.5% stake of Aramco in the listing, mainly relying on domestic and regional investors after less-than-hoped-for interest from abroad, as many big foreign investors were skeptical of the company’s finances and valuation.
- Sources also told Reuters that Aramco could exercise a 15% “greenshoe” option that would allow it to sell additional shares and increase the size of the public listing to a maximum of $29.4 billion.
- While Aramco is yet to comment on the IPO pricing, a formal announcement is expected later on Thursday, Reuters reported.
Key background: Aramco’s IPO listing was first announced by the crown prince in 2016 as part of his Vision 2030 socioeconomic reform program—in part aimed at reducing the country’s dependence on oil. But the IPO was twice put on hold in as many years, amid concerns over valuation, financial disclosures and security risks. Aramco chairman Yasser al-Rumayyan has told CNBC that the IPO is a safe bet for investors, despite lasting concerns over the September 14 drone and missile attack on Aramco facilities, after which it took weeks for the Saudi government to restore oil production.
Further reading: Saudi Aramco, World’s Largest IPO, Gets Delayed Again—This Time Until December (Sergei Klebnikov)
Saudi Aramco, World’s Largest IPO, Finally Gets Green Light (Sergei Klebnikov)