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Saudi Aramco shares to start trading on December 11

Aramco IPO Set to Launch on 11 December

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Saudi oil company Aramco is preparing its initial public offering that is set to happen on Wednesday, 11 December. Meanwhile, it has called its regional partners to invest in the early stage of its IPO. Responding to the call the Kuwait government has announced it would invest $1 billion in the company. 

While the news was confirmed on 3 December, Saudi Arabia is looking to raise about $25 billion. Recently, the authority of Abu Dhabi has announced it would invest $1.5 billion.

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Overall, the good news seems to encourage markets to invest in Aramco’s IPO, only a few months after the terrorist attack at a Saudi plant back in September.

Aramco has managed to convince

While Aramco’s IPO was postponed to 11 December, its future shares’ price are set to $8.53 each, giving a company value of $1.7 trillion. “The offering is expected to raise $25.6 billion — a fraction of the $100 billion that Prince Mohammed originally imagined.” explained the New York Times.

Last Monday, a report published by Reuters showed that institutional investors have already poured in $38.4 billion worth of bids, which is “equivalent to more than twice the number of shares on sale.”

As a matter of fact, the Saudi oil company aims to sell 1.5% of its shares “in a deal that could raise up to $25.6 billion”, reported the news agency.

Read on Alvexo: “Saudi Arabia to Launch Global Oil And Gas Expansion”

Kuwait and Abu Dabi as ambassadors

As it turns out, Kuwait has announced last Monday that it would invest about “$1 billion in the initial public offering of Saudi Aramco as the kingdom asks regional allies to bolster the record share sale, according to people familiar with the matter,” reported Bloomberg.

Last week, Abu Dhabi also confirmed that it would invest $1.5 billion in the oil giant company,  sending a reassuring sign to the industry, as Abu Dhabi currently is the oil richest Emirati in the world.

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Foreigners show limited interest

However, it looks like local investors seem less keen on Aramco’s IPO than other institutions, such as Saudi National Commercial Bank in 2014.

If the Saudi state-owned company’s IPO could become the biggest IPO in the world after the Chinese Alibaba in 2014, it could also have a hard time catching the eye of global experts. As a report from Samba Capital showed, only 10.5% of the early investors were foreigners.

 

 

 

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.