Saudi Aramco (Aramco), the world’s most profitable company, has finally set its share price for its Initial Public Offering (IPO). The company, which was bomb shelled by drone attack earlier this year, has set a share price of 32 riyals ($8.53) each. It plans to sell a 1.5% stake or 3 billion shares, to raise $25.6 billion for the company.
Aramco is selling 0.5% stake to Saudi Arabian citizens and residents and the remaining stake to sovereign wealth funds, asset managers, and government-run pension programs. The Hindu stated that most of the company’s bidding came from its own country-based funds and companies, while foreign investors accounted for only 10.5% of the bids.
At the time Aramco starts trading, it will hit the record valuation of $1.7 trillion beating Apple’s market valuation of $1.15 trillion. Moreover, Aramco’s raised funds will break Alibaba’s record of $25 billion IPO debut of 2014. Saudi Arabia’s Crown Prince Mohammed bin Salman announced his plans to take the company public two years ago.
“Saudi Arabia 2030” plan that envisions the Prince’s goal to lower the country’s dependence on oil and expand public service sectors, which include energy, healthcare, infrastructure, and tourism, will partially be made possible by raising funds with help of Aramco’s public offering. The generated funds will be used for the development of the country’s economy.
Along with the IPO, Aramco has committed to pay a large annual dividend until 2024, ensuring that investors don’t sell their shares and drop the company’s valuation. Amid the biggest IPO, analysts, and investors are afraid of the global slowdown, which will further lower the oil prices and upheaval the market.
The Crown Prince had previously targeted the IPO to reach $2 trillion in a valuation and to sell a 5% stake of the company, which involved foreign listing. Presently, it doesn’t have any immediate foreign exchange listing plans.
Aramco is expected to start trading in Riyadh later this month. To prop up the oil prices, The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia met on Thursday to curb the oversupply of oil. A panel of OPEC led by Russian and Saudi Arabia’s minister recommended that they should deepen the oil cuts 500,000 barrel per day (bpd) from the existing 1.2 million bpd.