Aramco’s ‘greenshoe option’ pushes IPO to $29.4 billion

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A trader talks to others in front of a screen displaying Saudi stock market values in Riyadh. Sunday’s trading figures value Saudi Aramco at $1.85 trillion. (AP)
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Above, market action during the second day of trading of Aramco shares at the Saudi stock market in Riyadh on December 12, 2019. Aramco initially raised a then-record $25.6 billion in its IPO in December by selling 3 billion shares at 32 riyals. (AFP)
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Updated 14 January 2020

Aramco’s ‘greenshoe option’ pushes IPO to $29.4 billion

  • Gulf stock marks extend gains from previous session as regional tension eases

DUBAI: Saudi Aramco announced on Sunday that its initial public offering raised a record $29.4 billion, a figure higher than previously announced, after the company used a so-called “greenshoe option” to sell millions more shares to meet investor demand.

The company said that the sale of an additional 450 million shares took place during the initial public offering process.
The oil and gas company began publicly trading on the local Saudi Tadawul exchange on Dec. 11.
It hit upwards of $10 a share on the second day of trading.
This gave Aramco a market capitalization of $2 trillion, making it comfortably the world’s most valuable company.

Additional sales
Saudi Aramco’s additional sales mean the company has publicly floated 1.7 percent of its shares. Its IPO, even before the added sales, was the world’s largest ever.
A greenshoe option, or over-allotment, allows companies to issue more shares in an IPO when there is greater demand from participants in the initial offer. Investors were allocated the additional shares during book-building, Aramco said.
The shares sold in the over-allotment option “had been allocated to investors during the book-building process and therefore, no additional shares are being offered in the market today,” Saudi Aramco said.

FASTFACT

A greenshoe option, or over-allotment, allows companies to issue more shares in an IPO when there is greater demand from participants in the initial offer.

Company shares traded at around around SR34.7, or $9.25 a share, on Sunday.
Sunday’s trading figures value Saudi Aramco at $1.85 trillion, still well ahead of Apple, the second largest company in the world after the oil giant.
All major Gulf stock markets opened higher on Sunday, extending their gains from the previous session.
Saudi Arabia’s index rose 0.7 percent, outperforming regional peers and buoyed by gains in financial and petrochemical shares. Al-Rajhi Bank and Banquet Saudi Francis were up 0.6 percent and 1.5 percent, respectively.
Advanced Petrochemical added 1.9 percent after reporting a 5.9 percent rise in estimated annual profit to SR759 million ($202 million).
Dubai’s index inched up 0.1 percent as blue-chip developer Emaar Properties gained 0.3 percent. Amanat Holdings rose 2.3 percent after the health care and education investment firm said it was assessing a possible acquisition of a stake in the Middle East operations of the VPS health care group.
Abu Dhabi’s index was also up 0.1 percent, with Emirates Telecom Group gaining 0.2 percent.
Kuwait’s and Oman’s stock markets will resume trading on Tuesday and Wednesday respectively.


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.”