Saudi Aramco IPO receives $17.1 bln in orders from institutional tranche

The institutional portion of Saudi Aramco’s initial public offering (IPO) on the Saudi Stock Exchange (Tadawul) is oversubscribed, having received over 64 billion riyals ($17.1 billion) in orders, while the retail tranche has received 10 billion riyals, a banking source told Al Arabiya English on Thursday.

By November 20, after just four days of book building, the institutional portion was fully subscribed, the banker added.

The deadline to subscribe for institutional investors is December 4, while the deadline for retail investors is slated for November 28. The process started on November 17.

Saudi Aramco is offering 1.5 percent of its shares on the Tadawul, with 0.5 percent set aside for retail, or individual investors. The remaining shares are allocated for institutional investors, such as banks or sovereign wealth funds.

The company has set an indicative price range of 30-32 riyals per share ($8-8.53), which would value the oil giant at $1.6 to $1.7 trillion. At this valuation, the company could raise $24 billion to $25.5 billion from the IPO, according to Al Arabiya English’s calculations.

The final price for the offering is set to be announced on December 5.

Another banking source told Al Arabiya English that they expect the IPO to be three to four times oversubscribed when the book building process is completed on December 4.

Aramco launched its IPO process on November 3.

The IPO had been put on hold last year following more than two years of preparations and market reforms in Saudi Arabia. Aramco instead purchased a 70 percent stake worth $69 billion in Tadawul-listed petrochemical firm Saudi Basic Industries Corp (SABIC).

The acquisition of SABIC and Aramco’s sale of $12 billion bonds in April earlier this year were among the main factors behind the IPO’s delay, according to officials.

The company, which plans to pay a base dividend of $75 billion in 2020, reported a profit of $111.1 billion in 2018 and $68 billion in the first nine months of 2019. It is the most profitable company in the world, ahead of Apple Inc.

-Matthew Amlôt, Al Arabiya English, contributed to this article.