Saudi Aramco attracts $38bn in orders from institutional investors

Andrew Cummings
December 3, 2019

Institutional investors have put in 144.1 billion riyals ($38.4bn) worth of bids for Saudi Aramco's planned initial public offering (IPO), equivalent to more than twice the number of shares on sale, financial advisers for the IPO said.

The deadline to submit bid forms for institutional investors, such as banks or hedge funds, is set for December 4, while the deadline for retail investors - which starts November 17 - is set for November 28.

Saudi Arabia's state-controlled energy giant Aramco plans to tap bond markets for the first time as early as next week, sources within the company told CNBC on Thursday.

The deal could be the world's biggest IPO if it tops the $25bn listing of China's Alibaba in 2014.

For his part, Gary Ross, founder of BlackGold Investors, said it would make sense for Riyadh to support further cuts because of the Aramco IPO; of the OPEC meeting itself, Norbert Rucker, head of commodity research at Julius Baer, said "the most likely outcome is an extension of the supply deal for another six months, wrapped in flowery communication leaving the room open for further loose compliance and policy adjustments should market conditions change".

Saudi Arabia's Tadawul has introduced.TASI cap equity index of 15% set address concerns over the weight of oil giant Saudi Aramco will have when it lists on the stock.

Saudi Arabia's launch of the Aramco IPO has so far received a mixed response from investors, 1.7 times oversubscribed.

"Any constituent whose index weight reaches or exceeds the threshold will be capped in accordance with the set limit", Tadawul said in a statement.

The deal is the centerpiece of Crown Prince Mohammed bin Salman's plans to diversify the Saudi economy away from oil.

In the first update on institutional investor interest in the listing, Samba said it had received bids from them worth 118.86 billion riyal ($31.70 billion).

The strict stance on oil output may be enough hold prices at $65 a barrel but it is "unlikely that Opec+ will be able or willing to push prices up significantly higher despite Saudi Arabia's aspirations", he added.

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