Aramco IPO receives $17.1bn in orders from institutional tranche: Source

November 21, 2019
Aramco Chairman Yasir Al-Rumayyan, right, and Aramco CEO Amin Nasser at the launch of the Aramco IPO on Nov. 17.
Aramco Chairman Yasir Al-Rumayyan, right, and Aramco CEO Amin Nasser at the launch of the Aramco IPO on Nov. 17.

DUBAI — The institutional portion of Saudi Aramco’s initial public offering (IPO) on the Saudi Stock Exchange (Tadawul) is oversubscribed, having received over 64 billion riyals ($17.1 billion) in orders, while the retail tranche has received 10 billion riyals, a banking source told Al Arabiya English on Thursday.

By Thursday, after just five days of book building, the institutional portion was fully subscribed, the banker added. The deadline to subscribe for institutional investors is Dec. 4, while the deadline for retail investors is Nov. 28. The process started on Nov. 17.

Saudi Aramco is offering 1.5 percent of its shares on the Tadawul, with 0.5 percent set aside for retail, or individual investors. The remaining shares are allocated for institutional investors, such as banks or sovereign wealth funds.

The company has set an indicative price range of SR30-32 per share ($8-8.53), which would value the oil giant at $1.6 to $1.7 trillion.

At this valuation, the company could raise $24 billion to $25.5 billion from the IPO, according to Al Arabiya English’s calculations. The final price for the offering is set to be announced on Dec. 5.

Another banking source told Al Arabiya English that they expect the IPO to be three to four times oversubscribed when the book building process is completed on Dec. 4.

Saudis began flocking to banks to subscribe in Aramco's shares, coinciding with the start of the period of building the order book for the institutional and individual underwriting segments.

Retail investors’ turnout for Saudi Aramco’s IPO is unprecedented, Rania Nashar, chief executive officer, Samba Financial Group, had said a day after the launch of the IPO. The Samba CEO told Al Arabiya TV that tens of thousands of investors have subscribed to hundreds of millions of Aramco shares at Samba since the launch of the offering.

She also expected that the number of retail investors subscribing to Aramco would be higher than any previous subscription in the market, noting that the announced price range represents a great opportunity for all investors.

Aramco had explained at the launch that if the final offer price is below SR32, individual investors can, in respect of the difference between the highest price of the offer price range and the final offer price, elect to have the surplus subscription amount refunded in cash by crediting the account of individual investors or to be considered for an allotment of additional offer shares. — SG/Al-Arabiya English

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