Saudi Aramco attracts $38bn in orders from institutional investors

Pedro Gonçalves
Saudi Aramco attracts $38bn in orders from institutional investors

Institutional investors have put in 144.1 billion riyals ($38.4bn) worth of bids for Saudi Aramco's planned initial public offering (IPO), equivalent to more than twice the number of shares on sale, financial advisers for the IPO said. 

The institutional bookbuilding began on Nov. 17 and investors have until Dec. 4 to place orders. Aramco plans to sell 1.5% of its shares, in a deal which could raise up to $25.6bn. The Saudi oil giant has received subscription orders from institutional buyers for around 4.6 billion of shares so far, Samba Capital, NCB Capital and HSBC Saudi Arabia said.

The deal could be the world's biggest IPO if it tops the $25bn listing of China's Alibaba in 2014.

Kuwait's government will invest as much as $1bn in the IPO as the kingdom asks regional allies to bolster the record share sale. Kuwait's move follows Abu Dhabi, the oil-rich member of the United Arab Emirates, which has decided to invest $1.5 billion in Aramco, people told Bloomberg. 

Aramco has previously said 0.5% of the offering will be allocated to retail investors, leaving 1% - or 2 billion shares - for institutional buyers.

Meanwhile, Saudi Arabia's Tadawul has introduced an equity index cap of 15% which is set to address concerns over the weighting oil giant Saudi Aramco will have when it lists on the exchange.

State-owned oil firm Aramco is expected to list 1.5% of its shares this month in a deal which could raise more than $25 billion and top the record initial public offering (IPO) of Chinese retailer Alibaba on the New York Stock Exchange in 2014. The Aramco IPO is seen as a test for the Saudi exchange, where the largest listing so far has been worth $6bn.

"Any constituent whose index weight reaches or exceeds the threshold will be capped in accordance with the set limit," Tadawul said in a statement.

Aramco is expected to have an initial weight of close to 10% in the Tadawul all-share index (TASI).

The deal is the centerpiece of Crown Prince Mohammed bin Salman's plans to diversify the Saudi economy away from oil.


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