RIYADH/DUBAI •Saudi Aramco shares surged the maximum permitted 10 per cent above their IPO price on their Riyadh stock market debut yesterday, closing in on the US$2 trillion valuation long sought by Saudi Crown Prince Mohammed bin Salman.
The shares leapt to 35.2 riyals (S$12.76) each, up from the initial public offering (IPO) price of 32 riyals and at the daily limit of price moves allowed by the exchange.
That gives the state-owned oil giant a market value of about US$1.88 trillion (S$2.6 trillion), comfortably making it the world's most valuable listed company, although it will have one of the smallest free floats of publicly tradeable shares, at just 1.5 per cent.
The market value is more than six times that of US oil major Exxon Mobil Corp; more than twice the size of Saudi Arabia's annual gross domestic product; and ahead of US tech giant Apple's market value of about US$1.2 trillion.
Saudi Arabian Oil Co (Aramco) raised a record US$25.6 billion in its IPO last week, the culmination of a years-long effort by the Crown Prince to open up the energy giant to outside investors.
The flotation, a major challenge for the Riyadh stock exchange, propels the bourse into the world's top 10 by value of listed companies.
But Saudi Arabia relied on mainly domestic and regional investors to buy Aramco shares after lukewarm interest from abroad.
"This is a successful IPO and the Aramco listing will add depth to the local market by providing exposure to a vital sector of Saudi Arabia's economy," said Mr Bassel Khatoun, managing director for frontier and Mena (Middle East and North Africa) at Franklin Templeton Emerging Markets Equity.
"We are hopeful that Saudi Aramco uses the Tadawul listing as a springboard to an eventual international listing."
Finance Minister Mohammed al-Jadaan told Reuters the bulk of the IPO proceeds would be used on domestic projects, while the global buzz would help attract foreign capital into the Saudi economy.
Aramco shares began trading half an hour after the market opened as the bourse allowed extra time for investors to place bids in the "opening auction" in anticipation of high demand. Within the first hour, 766.8 million shares had changed hands, more than for any other Riyadh-listed stock.
"It's a great day for Saudi Arabia and the leadership of Saudi Arabia and for the people of Saudi Arabia. It's a D-Day for Aramco, it's a day of reckoning and vindication," the Energy Minister, Prince Abdulaziz bin Salman, told Reuters in Madrid.
Aramco stock will become part of the Tadawul index by next week and of global benchmarks such as MSCI and FTSE later this month, which analysts said should fuel demand.
Aramco's debut comes as oil prices are being supported by a Saudi-orchestrated move by Opec and oil producing allies to commit to some of the industry's deepest output cuts in a decade to try to avert oversupply.
Most foreign actively managed funds told Reuters they would likely steer clear of the IPO, citing concerns about governance as well as the environment and regional tensions, particularly after drone attacks on major Saudi facilities in September.
REUTERS
