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Saudi Aramco's Bookrunners Recommend Pricing IPO at Top End

Saudi Aramco's Bookrunners Recommend Pricing IPO at Top End

Thursday, 5 December, 2019 - 07:30
A sign of Saudi Aramco's initial public offering (IPO) is seen during a news conference by the state oil company at the Plaza Conference Center in Dhahran, Saudi Arabia November 3, 2019. (Reuters)

Saudi Aramco’s bookrunners have recommended pricing its initial public offering at 32 riyals ($8.5) per share, the top of an indicative price range, three sources familiar with the deal said, potentially making it the world’s biggest IPO.

At that level, Aramco would have a market valuation of $1.7 trillion, comfortably overtaking Apple as the world’s most valuable listed firm.

If the deal is priced at the top, Aramco’s IPO will exceed the $25 billion raised in the listing of China’s Alibaba Group Holding Ltd in 2014, the biggest flotation to date.

Two sources told Reuters the firm could exercise a 15% “greenshoe” option, offering more shares to meet high demand from institutional investors. If exercised, it would mean the stake sale could increase from 1.5% to 1.725%.

Aramco is expected to announce on Thursday the results of the book-building for allocating shares to institutional buyers, typically asset managers, insurers or pension funds.

The final allocation will also be announced on Thursday.

Aramco previously said 0.5% of the offering would be allocated to retail investors and 1%, or 2 billion shares, for institutional buyers.

The retail tranche, which closed on November 28, attracted bids worth 47.4 billion riyals, equivalent to around 1.5 times the number of shares offered.

A full allocation for retail investors who ordered 1,000 shares or less has also been recommended, one of the sources said, adding that allocation for higher than this amount would be decided on a pro-rata basis.

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