Aramco shares to make debut as biggest IPO gets bigger

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Updated 11 December 2019

Aramco shares to make debut as biggest IPO gets bigger

  • Samba Capital, NCB Capital and HSBC Saudi Arabia issued a statement late Monday
  • Saudi subscribers were allocated 96.6 percent of the retail offering

LONDON : Saudi Aramco shares make their stock market debut on Wednesday as it emerged that the oil giant could raise even more from its already record-breaking share sale.

Aramco will exercise its 15 percent “greenshoe option” either in part or in whole during the first 30 days of its trading period, its lead managers said.

A greenshoe option is financial jargon for a clause that allows an underwriter the right to sell investors more shares than planned if demand proves higher than anticipated.

Samba Capital, NCB Capital and HSBC Saudi Arabia issued a statement late Monday confirming an earlier report on the Al Arabiya news channel citing an NCB Capital executive.

It means the share sale could generate as much $29.4 billion if exercised fully. The main IPO raised $25.6 billion on Thursday.

Samba Capital said that the IPO was hugely oversubscribed, attracting aggregate subscriptions of SR446 billion, representing coverage of 465 percent.

The listing and trading of the company’s shares on Tadawul starts just four working days after the end of the subscription phase, Samba noted.

The number of individual subscribers was 5.056 million, who bought SR49.2 billion worth of shares.

Saudi subscribers were allocated 96.6 percent of the retail offering with non-Saudis (expatriates and GCC nationals) getting 3.4 percent. 

For the institutional tranche, the final value of subscriptions totaled SR397 billion.

The Saudi Aramco IPO is a key part of the Kingdom’s plan to transform its economy by reducing its reliance on oil, developing its financial markets and attracting increased levels of foreign direct investment.

Saudi Finance Minister Mohammed Al-Jadaan said that the proceeds from Aramco’s IPO would be reinvested, helping to create more revenue channels for the government.

The Aramco IPO is expected to pave the way for more privatizations in the Kingdom.

“Privatization is at the top of the government’s priorities,” Al-Jadaan told reporters on Monday.

“We will continue to support big projects and will continue to support promising projects,” he said. “Enabling the private sector is the top priority of Vision 2030. We have more to come and our journey toward Vision 2030 demands


Big oil feels the heat on climate as industry leader promises: ‘We will be different’

Updated 22 January 2020

Big oil feels the heat on climate as industry leader promises: ‘We will be different’

  • Trump singles out ‘prophets of doom’ for attack
  • Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal

LONDON: Teenage environmental activist Greta Thunberg slammed inaction over climate change as the global oil industry found itself under intense scrutiny on the opening day of the World Economic Forum in Davos.

The teenage campaigner went head to head with US President Donald Trump, who dismissed climate “prophets of doom” in his speech.
She in turn shrugged off the US president’s pledge to join the economic forum’s initiative to plant 1 trillion trees to help capture carbon dioxide.
“Planting trees is good, of course, but it’s nowhere near enough,” Thunberg said. “It cannot replace mitigation. We need to start listening to the science and treat this crisis with the importance it deserves,” the 17-year-old said.
The 50th meeting of the World Economic Forum was dominated by the global threat posed by climate change and the carbon economy.
The environmental focus of Davos 2020 caps a year when carbon emissions from fossil fuels hit a record high, and the devastating effects of bushfires in Australia and other climate disasters dominated the news.
Oil company executives from the Gulf and elsewhere are in the spotlight at this year’s Davos meeting as they come under increased pressure to demonstrate how they are reducing their carbon footprint.
“We are not only fighting for our industry’s life but fighting for people to understand the things that we are doing,” said Vicki Hollub, CEO of Occidental, the US-based oil giant with extensive oil operations in the Gulf. “As an industry when we could be different — we will be different.”

‘Planting trees is good, but nowhere near enough,’ activist Greta Thunberg told Davos. (Shutterstock)

She said the company was getting close to being able to sequester significant volumes of CO2 in the US Permian Basin, the heartland of the American shale oil industry which is increasingly in competition with the conventional oil producers of the Arabian Gulf.
“The Permian Basin has the capacity to store 150 gigatons of CO2. That would be 28 years of emissions in the US. That’s the prize for us and that’s the opportunity. People say if you’re sequestering in an oil reservoir then you are producing more oil, but the reality is that it takes more CO2 to inject into a reservoir than the barrel of oil that it makes come out,” Hollub said.
The challenge Occidental and other oil companies face is to make investors understand what is happening in this area of carbon sequesteration, she added.
The investment community at Davos is also looking hard at the oil industry in the face of mounting investor concerns.
Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal. It accused some of these groups of failing to live up to the World Economic Forum goal of “improving the state of the world.”