Saudi’s Aramco shares rose 10percent, as it makes a debut on Saudi Arabia’s Tadawul stock exchange in Riyadh on Wednesday.
The world’s most profitable company’s shares opened at 35.2 riyals ($9.39) on Wednesday, 10percent above their IPO price of 32 riyals, this has brought the valuation to $1.88 trillion, closing in on the $2 trillion price tag long coveted by Saudi Crown Prince Mohammed bin Salman.
At that price, Aramco is the world’s most valuable listed company, more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.
The 10percent increase is the maximum daily increase allowed on the exchange.
The oil-giant had last week pulled-off the biggest Initial Public Offer in history after raising $26.bn by selling 1.5percent of the company, beating Chinese tech-giant Alibaba’s $25billion in 2014.
An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.
According to Samba Capital, the IPO local adviser, 97percent of retail investors who received shares were from the country and more than 75percent of shares sold to institutional investors went to Saudi companies, funds and government institutions.
Aramco’s IPO was first mulled in 2016 aimed at shifting the Saudi’s economy away from oil.
The Saudi government initially discussed floating 5percent of the company in 2018 in a deal that would raise as much as $100 billion. It was looking at international markets such as New York or London, as well as Riyadh, signaling that the country was open to global investment.
Yet the project was shelved amid concerns about legal complications in the United States, doubts about the $2 trillion valuation, and international outrage triggered by the murder of journalist Jamal Khashoggi in a Saudi consulate in Turkey.
Funds from the 1.5% stake sale will go to the Public Investment Fund (PIF), the sovereign wealth fund tasked with delivering Prince Mohammed’s ambitious economic transformation drive to wean the world’s top oil exporter off crude revenues.
Mohammed al-Jadaan, Saudi’s Finance Minister said proceeds will be used largely, maybe not totally, in the local economy, in projects where the PIF will be the first mover which then basically pulls more private sector participation-so the money will remain in the system mostly.
