Saudi Aramco’s Initial Public Offering (IPO) has attracted approximately 73,000 million riyals (around $17,608) in institutional and retail orders so far, as Saudi Arabia’s Samba Financial Group said on Thursday.
About 1.8 million retail subscribers have injected more than 14 billion riyals into the IPO so far; Samba, one of the banks managing the deal, said in a statement sent to Reuters.
Institutional subscriptions amounted to 58.4 billion riyals and 1.82 billion subscribed shares, it added.
Saudi Arabia’s domestic market is now vital to Saudi Aramco’s IPO after the state oil company this week pared back its listing plans. Even religious leaders are assuring citizens that taking part is ‘halal [permissible]’ https://t.co/kjUEYR1VY0— Financial Times (@FinancialTimes) 22 de noviembre de 2019
25 banks will serve as bookrunners
Saudi Aramco has contracted 25 banks – a near-record amount – to work on this listing, which will be carried out in just one market: the Riyadh Stock Exchange.
Companies commonly contract one to three banks for a market debut. But the world’s most profitable company attracted an army of international banks, all eager to work in one of the largest IPOs in history.
These 25 banks will act as bookrunners during the negotiations. They could raise up to $25 billion (€22.6 billion) for the Saudi government when the process begins early next month. The bookrunners arrange and take orders for the issue of the shares.
Market analysts from Refinitiv said that, with this group, Aramco is just one bank away from hitting the world record, held by Postal Savings Bank of China, which was listed in 2016 with 26 bookrunners.
The group includes western banking companies like Bank of America Merrill Lynch, BNP Paribas, Citi, Credit Agricole CIB, Deutsche Bank, JP Morgan, Morgan Stanley, RBC Capital Markets, Santander, Société Générale, and UBS.
Other institutions include local banks such as Saudi Arabia’s National Commercial Bank, Al Rajhi Capital, Banque Saudi Fransi, First Abu Dhabi Bank, Riyad Bank, and SambaCapital.
Finally, Bank of China, EFG Hermes, GIB Capital, Mizuho Financial Group, and Sumitomo Mitsui are also working on the IPO.
An awaited listing
Aramco plans to sell 1.5% of the company, or about 3 billion shares, at an indicative price range of 30 riyals to 32 riyals. This would value the IPO at as much as 96 billion riyals and giving the company a potential market value of between $1.6 trillion and $1.7 trillion.
Saudi Arabia had originally calculated the state-owned company’s value at $2 trillion. However, this figure was downgraded to $1.7 trillion. On Sunday, the company decided it will only sell a 1.5% share, less than the expected 2%.
According to Aramco, it expects that at least a third of this sale will be covered by small-scale shareholders. They have until November 28 to sign the IPO.
Meanwhile, the deadline for institutional investors to sign is November 4.
Aramco began this process on November 3, after a series of failed attempts. The agreement is a key component of crown Prince’s Mohammed bin Salman’s plans to collect millions of dollars to invest in non-oil companies, creating jobs, and diversifying the economy of the world’s largest oil exporter.
Saudi Aramco aiming for the local market
Saudi Aramco began an aggressive publicity campaign in Saudi Arabia, inviting local small-scale investors to participate in the company’s listing. The company rarely advertises in the kingdom.
“Soon in Tadawul” read the announcements, referring to the Riyadh Stock Exchange. This is where the company will be listed next month.
The Kingdom had planned to sell a small percentage of Aramco shares to local small investors. According to financial analysts, the internal market is vital for the company’s plans, after what was qualified as a “lukewarm international reception.”
In this scenario, the local listing became a high-risk bet for Prince Mohammed bin Salman’s economic program.
Saudi banks are offering loans at zero interest rates for up to three months and the company promised bonuses per every 10 shares.
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