Aramco, the Saudi Arabian oil firm, recently announced plans to sell shares in the company to investors both in Saudi Arabia and across the globe. This move will make the company the world’s most valuable firm, as its IPO has been valued at $1.7tn.
Not only will this make the company the most valuable listed on the stock exchange, but it is also the highest IPO ever achieved by a single company. The company raised $25.6bn in its market debut, and reports suggest that share sales have been oversubscribed, with large numbers of investors keen to get involved in this profitable venture.
Record Breaking IPO
The valuation beats that of Chinese mega-conglomerate retailer Alibaba, which was valued at $25bn when it debuted on the floor in China. This gives the state-owned Aramco the unique achievement of being one of the most valuable stocks in the world and the world’s most valuable listed company, a title previously held by American tech giant Apple.
The oil company will begin trading on 12 December and is expected to make a significant splash amongst investors in Saudi Arabia and internationally. However, despite the historically high valuation, it has not met the reported expectation of Mohammed Bin Salman, Crown Prince, who made an initial valuation of around $2tn.
Key Saudi Players
The oil company will sell off just 1.5% of shares in the firm for approximately $8.50 and has been marketed primarily towards wealthy families and key financial players in Saudi Arabia. However, international investors are sceptical of global success outside of the region, particularly as the company has rescinded its proposal to float not only regionally but also on a major international stock exchange, such as London or New York.
The flotation of Aramco comes after Saudi Arabia sought to diversify its economic output. Oil is one of the biggest money-makers in the kingdom, yet the government is now turning its attention to other industries to help establish itself as a key player in global business and trade, closer to that of China or the United States. Initially, the company had planned to sell off shares in 2016 but met obstacles when their valuation vastly outweighed that predicted by various experts.