‘Source of pride’ as investors scramble for Saudi Aramco shares

Saudi Arabian and international investors have subscribed to the initial public offering of Saudi Aramco in huge numbers. (File/AFP)
Updated 29 November 2019

‘Source of pride’ as investors scramble for Saudi Aramco shares

  • Institutional orders in the IPO included 54% from Saudi cooperates, 24.1% from Saudi funds and 10.5% from non-Saudi investors
  • The subscription period for institutional investors remains open to Dec. 4

DUBAI: Saudi Arabian and international investors have subscribed to the initial public offering of Saudi Aramco in huge numbers, with demand for shares in the world’s most profitable company exceeding the number of shares on offer.
Financial advisers to the biggest IPO in history announced that bids to the value of $44.3bn (166.275bn riyals) have been received in total from institutional and private investors for the $25.6bn worth of shares on offer.
With the order books open to institutions until next Wednesday, that means the IPO will definitely be the biggest in financial history, and should, in theory, lead to a jump in the share price when trading starts on Tadawul the following week.
Institutional demand for the shares even bigger than from private individuals. Corporates in the Kingdom account for more than half (54 percent) of the bid value, with Saudi funds and investment institutions comprising another big chunk (24.1 percent).
Non-Saudi investors are looking for 10 percent of the offer - a comparatively big figure given the fact the IPO was not marketed outside the region.
Rania Nashar, deputy chairman of Samba Capital, one of the advisers, said the IPO was “a source of pride” for the Kingdom.
“It is an indication of success and a signal of confidence, further bolstering the reputation and prestige of a company that has unrivaled standing globally in the energy sector. This success corroborates the foresight and depth of the strategic decision behind this landmark moment not just in Aramco’s history, but also in the development of the Kingdom’s economy,” she added.
Sarah Al Suhaimi, chief executive officer of NCB Capital and chair of the Tadawul where Aramco will be listed, said: “The success of the retail tranche is mirrored in the institutional tranche where bids reflect strong demand coming from across the spectrum of investor categories, reflective of Saudi Aramco’s compelling investment proposition.
“We are confident that this will be maintained throughout the remainder of the institutional book-building period. This institutional demand also speaks well of the depth and diversification of the Saudi capital markets and its investor base,” she added.


Mexico objects to labor enforcement provision in North American trade deal

Updated 39 min 25 sec ago

Mexico objects to labor enforcement provision in North American trade deal

  • Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage
  • US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico

MEXICO CITY: Mexico’s deputy foreign minister, Jesus Seade, said on Saturday he sent a letter to the top US trade official expressing surprise and concern over a labor enforcement provision proposed by a US congressional committee in the new North American trade deal.
Top officials from Canada, Mexico and the United States on Tuesday signed a fresh overhaul of a quarter-century-old deal, aiming to improve enforcement of worker rights and hold down prices for biologic drugs by eliminating a patent provision.
How labor disputes are handled in the new United States-Mexico-Canada Agreement (USMCA) trade deal was one of the last sticking points in the negotiations between the three countries to overhaul the agreement.
Intense negotiations over the past week among US Democrats, the administration of Republican US President Donald Trump, and Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage.
However, an annex for the implementation of the treaty that was presented on Friday in the US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico.
“This provision, the result of political decisions by Congress and the Administration in the United States, was not, for obvious reasons, consulted with Mexico,” Seade wrote in the letter. “And, of course, we disagree.”
USMCA was signed more than a year ago to replace the North American Free Trade Agreement (NAFTA), but Democrats controlling the US House of Representatives insisted on major changes to labor and environmental enforcement before voting.
The letter, released on Saturday, is dated Friday and addressed to US Trade Representative Robert Lighthizer. Seade said he would travel to Washington on Sunday to raise the issues directly with Lighthizer and lawmakers.
“Unlike the rest of the provisions that are clearly within the internal scope of the United States, the provision referred to does have effects with respect to our country and therefore, should have been consulted,” Seade wrote.
Both Canada and the US House Ways and Means Committee said the deal included a mechanism for verification of compliance with union rights at the factory level in Mexico by independent labor experts.
Some Mexican business groups bemoaned a lack of clarity and conflicting information on how the rules would actually be enforced under the deal, the first text of which became public only on Wednesday.