Monday 2 December 2019 1:01 pm

Institutional tranche of Saudi Aramco IPO twice oversubscribed

The institutional tranche of Saudi Aramco’s upcoming initial public offering (IPO) is more than twice oversubscribed, according to the sale’s managers.

Investors have put in 144.1bn riyals (£29.7bn) worth of bids since 17 November, around 4.6bn shares.

Read more: Saudi Aramco IPO on track as retail tranche oversubscribed

The institutional tranche closes at the end of this week, with the sale price set to be announced on 5 December.

Despite being oversubscribed, the level of interest is reportedly lower than for other emerging market IPOs.

Aramco has said that 0.5 per cent of the sale will be allocated to retail investors, with the remaining one per cent – two billion shares – for institutions.

On Friday Aramco confirmed that the retail tranche was also oversubscribed, with nearly 1.5bn shares subscribed, worth 47.4bn riyals (£9.8bn) in total.

Earlier this month Aramco said it would sell 1.5 per cent of its shares at 30-32 riyals each, which would give the company a valuation of $1.6 – $1.6 trillion.

If successful, the IPO could be worth as much as $25.6bn, which would make it the largest float in history, topping the $25bn mark set by Alibaba in 2014.

Local investment is crucial for the success of the IPO after Aramco decided to cancel its international investor roadshows amid fears of reduced interest from global investors.

Samba Capital did not provide a breakdown of the results, but in a statement last week it said that only 10.5 per cent of the offers had been made by foreign investors.

This morning Reuters reported that Saudi Arabia was pushing for Opec to deepen oil production cuts until June 2020 in preparation for the listing.

Read more: Saudi Arabia pushing Opec for deeper oil production cuts ahead of Aramco IPO

Sources told Reuters that Opec and its allies, including Russia, were currently discussing a deal to add 400,000 barrels per day to existing production cuts of 1.2m barrels per day.

Such a move would ensure oil prices remained high during Aramco’s initial public offering (IPO), which will be priced on 5 December, the same day as the cartel meets in Vienna.