Thursday 28 November 2019 2:08 pm

Saudi Aramco IPO on track as retail tranche oversubscribed

Retail orders for Saudi Aramco’s upcoming initial public offering (IPO) have reached 38.1bn Saudi riyals (£7.9bn), surpassing expectations for this section of the float.

Aramco had set aside one third – roughly a billion – of the shares in its 1.5 per cent offering for retails investors, but lead manager Samba Capital announced today that subscriptions had already hit 1.19bn.

Read more: Abu Dhabi and Kuwait funds plan investment in Saudi Aramco IPO

The oversubscription means that Aramco has sold 6.13bn riyals more than the amount needed for full coverage.

Subscriptions will continue until midnight on Thursday, with the final results announced on Friday.

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.

The float is a pillar of Crown Prince Mohammed bin Salman’s plans to diversify the Saudi economy away from its reliance on oil.

Yesterday it was reported that the national investment bodies of Abu Dhabi and Kuwait are planning investments in the IPO.

Multiple sources told Reuters that the Abu Dhabi Investment Authority (Adia) is taking a stake worth at least $1bn (£780m).

The Kuwait Investment Authority (Kia) is also preparing to invest, although the size of any potential stake is not known at this point.

Read more: Saudi Aramco set for $1.7 trillion valuation

Aramco officials have visited Kuwait and Abu Dhabi, which have strong political ties with Riyadh, to discuss participating in the offering.

The institutional tranche of the offering closes on 4 December, with the final price expected to follow the next day.