Aramco’s IPO value hits SAR 110.25 bln following institutional over-allotment: NCB Cap

Saudi Aramco’s IPO value rose to $29.4 billion (SAR 110.25 billion) on exercising the institutional overallotment option, Wassim Al Khatib, Head of Investment Banking at NCB Capital, the IPO financial advisor and coordinator, told Al-Arabiya TV.

The over-allotment option was exercised with the shares allocated to institutional investors. Accordingly, the final offering value hit $29.4 billion, or 1.725% of the company’s size.

The final number of shares stood at 3.45 billion, of which 450 million shares were granted to the stabilizing manager at a total value of SAR 115 billion – to be only exercised in case of the stock’s price fluctuation below the SAR 32 offer price, Al Khatib said.

The stabilizing process is only aimed to stabilize the stock price in case of fluctuations. The company allocated 1 billion shares to retail investors and 2.45 billion shares – including the “Greenshoe” over-allotment option – to the institutional tranche.

The bonus shares will be allocated to individual investors, and each Saudi Arabian family member will be considered to be an eligible retail bonus investor, on condition of holding those shares for 180 days at 100 shares maximum per person.

“The inactive funds tracking TASI are expected to inject $1.4 – 2.4 billion flows, upon inclusion of Aramco stock in the emerging market index. These inflows will boost the Saudi market,” he added.

The institutional shares allocation was insufficient. Therefore, institutions are expected to maintain their strong demand for Saudi Aramco upon market debut.

Most initial public offerings (IPOs) worldwide see strong momentum in the last 48 hours, as was the case with Saudi Aramco. Institutional investors injected SAR 397 billion, of which SAR 200 billion was pumped by 2,700 investors on the last day of offering.

Saudi Aramco’s IPO witnessed strong turnout from private and pension funds, fund managers, government entities, global investors and sovereign funds, Al Khatib noted, adding this diversity will reflect positively on the stock performance going forward.

Saudi Aramco’s allocation ratio stood at:

- 11.5% for pension funds

- 23% for global investors

- 24.3% for private companies

- 12.6% for government entities

- 28.6% for fund managers and funds

Allocations to global investors, including sovereign funds were based on the percentage of the offering. They were allocated 23% of total shares allocated to non-Saudi companies, Al Khatib concluded.

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