Thursday 5 December 2019 2:43 pm

Saudi Aramco IPO to be largest in history at $25.6bn

Saudi Aramco is set to raise a record $25.6bn (£19.5bn) in the largest initial public offering (IPO) in history, as it was reported that the oil giant would price its shares at 32 riyals (£6.50) per share, the top end of its range.

The sale price will see Aramco knock Chinese e-commerce giant Alibaba off the top spot for the biggest ever public offering.

The formal announcement is expected to follow later on Thursday.

Read more: Institutional tranche of Saudi Aramco IPO twice oversubscribed

The decision gives Aramco a valuation of $1.7 trillion (£1.3 trillion), overtaking Apple as the world’s most valuable listed firm.

However, the deal will miss Crown Prince Mohammed bin Salman’s $2 trillion target.

Sources told Reuters that the firm could choose to exercise a 15 per cent “greenshoe” option, which would see it offer more shares to meet more institutional investor demand.

If the option is pursued, the stake of Aramco for sale could increase from 1.5 per cent to 1.725 per cent.

Yesterday it was announced that the institutional tranche of the IPO was almost three times oversubscribed, receiving orders worth over $50bn.

The retail tranche, which closed a week ago, attracted bids worth 47.4bn riyals, equivalent to around 1.5 times the number of shares offered.

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

In recent weeks Riyadh scaled down its ambitions for the sale, choosing to cancel its international roadshow to focus instead on local Saudi and Gulf investors.

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

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

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

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