Saudi Aramco shares soar at maximum 10% on market debut

Aramco’s indicative debut price is seen at 35.2 riyals, 10 per cent above IPO price. (AFP)
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Updated 12 December 2019

Saudi Aramco shares soar at maximum 10% on market debut

  • Despite an unfavorable global market mood, the much-anticipated IPO has enjoyed the best possible start for investors
  • Company is now world’s largest publicly traded company, bigger than Apple

RIYADH: Saudi Aramco shares surged to the maximum allowed 10 percent above their listing price on their debut in Riyadh on Wednesday.


The stock jumped to SR35.2 ($9.39), up from the initial public offering (IPO) price of SR32 ($8.53), hitting the daily limit permitted by the Tadawul stock exchange and giving the company a valuation of about $1.88 trillion. 

At that price, Aramco is world’s most valuable listed company. That’s more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.

The Aramco IPO also surpassed the $25 billion raised by Chinese retail giant Alibaba in its 2014 Wall Street debut. 

HIGHLIGHTS

  • Shares up by the maximum daily limit
  • Valuation approaches $2 trillion goal
  • Tadawul propelled into global top ten

The listing debut was marked by a symbolic ringing of the Tadawul bell by Aramco Chairman Yasir Al-Rumayyan and Chief Executive Amin Nasser.

“This is a proud and historic mo- ment for Saudi Aramco and our majority shareholder, the Kingdom,” Al-Rumayyan said. The focus of company chiefs was “to work in the interests of all shareholders, guiding Saudi Aramco as it continues to fulfill its vital role in global energy supply, while striving to create long-term value to benefit all shareholders,” he said.

“Today’s milestone underlines the Kingdom’s commitment to nur- turing a strong capital market and demonstrates further significant progress in delivering Vision 2030 — the Kingdom’s transformation, economic growth and diversifica- tion program that continues with pace and determination.”

“Today Aramco will become the largest listed company in the world and (Tadawul) among the top ten global financial markets,” Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange, said during a ceremony marking the oil giant’s first day of trading.

Amin Nasser, the president and CEO of Saudi Aramco, meanwhile thanked the new shareholders for their confidence and trust of the oil company.

The sale of 1.5 percent of the firm, or three billion shares, is the bedrock of Crown Prince Mohammed bin Salman’s ambitious strategy to overhaul the oil-reliant economy.


Prince Abdulaziz bin Salman, the Kingdom's energy minister, said last week that investors who didn’t buy into the offering would be “chewing their thumbs” after missing out.

But for the 5 million people who did buy shares in the world’s biggest IPO, it was the best possible start for their investments.

With the ring of a bell, the Tadawul was catapulted into the top ten exchanges in the world by market value, marking another key milestone for a bourse that is rapidly gaining in global financial visibility following its inclusion in the MSCI Emerging Markets and FTSE Russell indexes last year.

“The level of demand for Saudi Aramco was high at almost 5 times oversubscribed, highlighting the local appeal for a quality asset and its attractive dividend policy, even if foreign participation was more muted,” said Bassel Khatoun, a managing director, at Franklin Templeton Emerging Markets Equity. “We believe Aramco’s Tadawul listing will provide further impetus for Saudi’s privatization drive.”

The share sale took place at a turbulent time for the global oil industry, increasingly under the spotlight because of its greenhouse gas emissions. At the same time, a global supply glut caused in part by the growth of the US shale oil sector has dampened investor sentiment towards the sector. Plans for the share sale faced a further shock in September when Saudi Aramco’s main oil processing facility in Abqaiq was hit in a drone attack.

Despite the unfavorable global market mood, the Saudi government pressed ahead with the sale that has long been a cornerstone of the Kingdom’s efforts to modernize its economy and develop its financial sector.

It is expected to be followed by more privatizations as Saudi Arabia seeks to curb its
budget deficit.

Announcing the Saudi budget earlier in the week, Finance Minister Mohammed Al-Jadaan said that the proceeds from the Aramco IPO would be reinvested, helping to create more revenue channels for the government.

Within just one hour of Aramco chairman Yasir Al-Rumayyan ringing the trading bell,
some 766.8 million shares had changed hands.

“Today’s milestone underlines the Kingdom’s commitment to nurturing a strong capital market and demonstrates further significant progress in delivering Vision 2030,” he said.

Millions of Saudis bought into the IPO and yesterday cheered the performance of their shares.
“Buying Aramco shares was a trustworthy opportunity for a small investor like me,” said Alanoud Issa, a 27-year-old housewife from Riyadh. “It is a small beginning which I am hopeful will result in a good dividend for me in the future.”

Such citizen investors formed a major chunk of the subscribers to the IPO, buying some SR49.2 billion worth of shares, many of them making their purchases from ATM machines across the Kingdom. 

Institutional investors, mainly from the region, bought SR397 billion of the stock.

 

 

Watch the video marking Aramco’s opening trading:


Libyan state oil firm warns against export blockade

Updated 18 January 2020

Libyan state oil firm warns against export blockade

  • The NOC issued a statement saying it “strongly condemns calls to blockade oil ports ahead of the Berlin Conference on Sunday”
  • Tribes close to eastern Libya-based military strongman Khalifa Haftar had called for a blockade of coastal oil export terminals

TRIPOLI: Libya’s National Oil Company warned Friday against threats to block oil exports, the war-torn country’s main income source, two days before a Berlin conference aimed at relaunching a peace process.
Tribes close to eastern Libya-based military strongman Khalifa Haftar had called for a blockade of coastal oil export terminals to protest a Turkish intervention against Haftar in the country’s grinding conflict.
The NOC later issued a statement saying it “strongly condemns calls to blockade oil ports ahead of the Berlin Conference on Sunday.”
Turkey has backed the Tripoli-based Government of National Accord as it faces an offensive by Haftar’s forces to seize the capital from what he calls “terrorists” supporting the GNA.
After months of combat, which has killed more than 2,000 people, a cease-fire came into effect Sunday backed by both Ankara and Moscow, which is accused of supporting Haftar.
However, after Turkey deployed troops to support the United Nations-recognized GNA, tribes close to Haftar threatened to close down the “oil crescent” — a string of export hubs along Libya’s northeastern coast under Haftar’s control since 2016.
His troops have also mobilized to block any counter-attack on the oil crescent, the conduit for the majority of Libya’s crude exports.
“The closure of the fields and the terminals is purely a popular decision. It is the people who decided this,” spokesman for pro-Haftar forces Ahmad Al-Mismari told Al-Hadath television late Friday.
The tribes also called for the “immediate” closure of the Mellitah, Brega and Misrata pipelines.
The head of the eastern Zouaya tribe told AFP that blocking exports would “dry up the sources of funding for terrorism via oil revenues.”
NOC chairman Moustafa Sanalla said the oil and gas sector is “vital” for the Libyan economy, as it is the “single source of income for the Libyan people.”
“The oil and the oil facilities belong to the Libyan people. They are not cards to be played to solve political matters,” he added.
“Shutting down oil exports and production will have far-reaching and predictable consequences.”
The oil-rich North African state has been in turmoil since a 2011 NATO-backed uprising that overthrew and killed dictator Muammar Qaddafi.
Its oil sector, which brings in almost all of the state’s revenues, has frequently been the target of attacks.
Sanalla said the consequences of exports and production being shut down for an extended period could be devastating.
“We face collapse of the exchange rate, a huge and unsustainable increase in the national deficit, the departure of foreign contractors, and the loss of future production, which may take years to restore,” he said.
“This is like setting fire to your own house.”