Saudi Aramco IPO proves a hit with small investors

Saudi Aramco shares will start trading on Dec. 11, the Saudi securities exchange Tadawul said. (File/AFP)
Updated 06 December 2019

Saudi Aramco IPO proves a hit with small investors

  • Saudi citizens were by far the biggest number of applicants, with 4.95 million seeking to buy in the IPO
  • Saudi Aramco shares will start trading on Dec. 11, the Saudi securities exchange Tadawul said

RIYADH: More than 5 million people - Saudi citizens, resident expats and nationals of other GCC countries - have bought shares in the initial public offering (IPO) of shares in Saudi Aramco, the biggest stock market flotation in history.

Because of the huge demand for shares in the flagship initiative of the Vision 2030 strategy to diversify the Saudi economy away from oil dependency, all those who applied for up to 1,500 shares will get the full entitlement, but bigger buyers will be scaled back.

Samba Capital, the lead manager for the record-setting share sale, announced that 5.06 million individual subscribers bought shares in the offer, spending nearly SR50 billion ($13.3 billion). Most of them did so online, or via the special ATM arrangements for the IPO.

Applications were received from all age groups, but the biggest number of applicants came in the 31 to 45-year-old age group, who accounted for nearly half the number of shares on offer to private investors. Some 1.7 million people aged between 46 and 64 also applied for shares.

The final offer price was set at SR32 - the top of the range indicated by Aramco at the beginning of the book-building process two weeks ago, valuing the IPO at $25.6 billion and the company at $1.7 trillion, the biggest in the world.

Those who applied for smaller numbers of shares will have their applications met in full, but because of the big demand for the offering among private investors, those who applied for 2,000 shares or more will have their final allotment scaled back, and funds will be returned.

Anybody who applied for 100,000 or more will receive only 12 percent of their application number.

The government could decide to increase the number of shares on offer by a further 15 percent of the IPO via what the investment bank adviser calls the “green shoe” mechanism, designed to ensure price stability when the shares start trading.

Saudi citizens were by far the biggest number of applicants, with 4.95 million seeking to buy in the IPO. But there was also significant demand from expats resident in the Kingdom, with more than 106,000 applying for shares.

Saudi Aramco shares will start trading on Dec. 11, the Saudi securities exchange Tadawul said on Twitter on Friday.


Riyadh to host next World Economic Forum regional summit

Updated 6 min 53 sec ago

Riyadh to host next World Economic Forum regional summit

  • The theme of the meeting will be the place of the region in the fourth industrial revolution
  • Middle East WEF’s in the past have been staged in Egypt, Jordan and some have been held in the UAE

DAVOS: Saudi Arabia will host the next Middle East summit of the World Economic Forum, the first time the Kingdom has staged the prestigious meeting of world leaders, it was announced in Davos on Thursday.

Borge Brende, the WEF president, told delegates: “The next Middle East summit will be held in Saudi Arabia on the 5 and 6 of April this year.”

The theme of the meeting will be the place of the region in the fourth industrial revolution, according to a posting on the official WEF website.

Middle East WEF’s in the past have been staged in Egypt, Jordan and some have been held in the UAE.

The announcement was made at a special meeting at Davos to consider the strategic priorities for Saudi Arabia as it prepares to stage the G20 meeting of world leaders in the Kingdom in November, the first time the power-summit has been held in the Middle East.