Daily Management Review

Record IPO Of $29.4 Billion For Saudi Aramco After Over-Allotment Of Shares


Record IPO Of $29.4 Billion For Saudi Aramco After Over-Allotment Of Shares
The State owned Saudi Arabian oil behemoth Saudi Aramco has extended its record fund generation form its initial public offering (IPO) to $29.4 billion, the company announced on Sunday, with the help of selling off an additional 450 million shares at the stock market through its right of exercising the “greenshoe option” that allows a company to sell more shares to the public than initially done through an IPO.
The initial money that Aramco had raised from the IPO was $25.6 billion, which in itself was an all time record for any IPO ever, when it had sold just 5 per cent of its total shares which amounted to 3 billion shares at 32 riyals ($8.53) a share. The company however had indicated then that it could sell more shares to the public through the avenue of over-allotment of shares.
According to Refinitiv data, the shares of the company were largely flat at 35 riyals shortly after the market opened.
Under the greenshoe option which is also known as over-allotment, a company is allowed to put up for sale more shares through an IPO in the eventuality of greater demand for shares from participants in the initial offer. Aramco said that the additional shares were allocated to investors during book-building.
“No additional shares are being offered into the market today and the stabilizing manager will not hold any shares in the company as a result of exercise of the over-allotment option,” Aramco said.
The recent environment of political tensions in the Middle East and the Gulf region following the faceoff between Iran and the United States had created a sort of volatility in the stocks of the company as its facilities are not far from Iran.
After dropping to its lowest on January 8, at 34 riyals, since start of public trading on December 11, Aramco shares revered to close at 35 riyals on Thursday. The closing price of its stock on Thursday put the market valuation of the company at $1.87 trillion, which was higher than the IPO price, but below the $2 trillion target for the IPO that had been set by the Crown Prince of Saudi Arabia - Mohammed bin Salman.