Picture: REUTERS/ALI JARAKJI
Aramco raised $25.6bn in the biggest IPO yet, selling shares at 32 riyals each and valuing the company at $1.7-trillion, overtaking Microsoft and Apple as the most valuable listed company. “Aramco should easily get to the $2-trillion valuation as soon as tomorrow; there is plenty of appetite for it,” said Marie Salem, the head of institutions at Daman Securities in Dubai. “And more money should flow soon with the international index inclusions. The start couldn’t be better.”
Not everyone is convinced the share price surge will last. Many international investors are avoiding the stock because of environmental, social and governance concerns, while others say the company is overvalued given its dividend yield versus peers. Aramco’s IPO relied on some of the kingdom’s richest families, who had members detained in the Ritz hotel during a so-called crackdown on corruption in 2017, and also on cash from neighbouring allies such as the sovereign wealth funds of Kuwait and Abu Dhabi. Gulf Co-operation Council investors are confident the stock price has plenty of room to increase, boosted by incentives that go from bonus shares to the fast inclusion in emerging-market benchmarks.
Goldman Sachs Group, acting as share stabilising manager, has the right to exercise an option to sell another 450-million shares. It could be executed in whole or in part up to 30 calendar days after trading begins. The previous largest IPO, Alibaba Group Holding, rose 38% in its trading debut in 2014.