Saudi Arabia's oil company Aramco soared 10% limit up on its first day of trading, reaching a valuation of $1.88 trillion, higher than any other publicly traded company in the world.
The record valuation reflects an oversubscribed book of mostly local investors who bought shares on the Saudi Tadawul stock exchange after they were forced by Riyadh to pump the stock.
Aramco only sold a tiny 1.5% sliver in the company, meaning that the kingdom and Public Investment Fund of Saudi Arabia could easily manipulate the price with such a small fraction of the stock public.
As the FT reported ahead of the IPO, Saudi Arabia was "Persuading" local institutions and wealthy families to buy shares in Saudi Aramco after its initial public offering, as part of a plan to drive up the stock price: the focus was to reach company's $2t targeted valuation, and as of this morning, the company is more than halfway there from $1.7 trillion.
The Aramco IPO proceeds will be used by Crown Prince Mohammed bin Salman to fund his Vision 2030 initiative and transform the Saudi economy away from oil and gas.
As MbS and Aramco can claim fame to the world's largest IPO, there was very little participation from foreign institutions, hence why the kingdom incentivized domestic funds and citizens to buy the stock on the day of the IPO. Monica Malik, the chief economist at Abu Dhabi Commercial Bank, told Reuters while Ice Brent Crude futures trade around $63-$64, the kingdom needs about $87 per barrel to balance its budget.
Last month, former director of the Central Intelligence Agency David Petraeus told CNBC that he believed Saudi Arabia is "Gradually running out of money," which could explain why Aramco was rushed to IPO. Sustainability of the Aramco IPO is questionable considering international participation is weak, and the kingdom not only forced domestic buyers to load up as much as they could but also were told to use leverage.
https://www.zerohedge.com/commodities/aramco-jumps-10-ipo-market-value-hits-188-trillion
The record valuation reflects an oversubscribed book of mostly local investors who bought shares on the Saudi Tadawul stock exchange after they were forced by Riyadh to pump the stock.
Aramco only sold a tiny 1.5% sliver in the company, meaning that the kingdom and Public Investment Fund of Saudi Arabia could easily manipulate the price with such a small fraction of the stock public.
As the FT reported ahead of the IPO, Saudi Arabia was "Persuading" local institutions and wealthy families to buy shares in Saudi Aramco after its initial public offering, as part of a plan to drive up the stock price: the focus was to reach company's $2t targeted valuation, and as of this morning, the company is more than halfway there from $1.7 trillion.
The Aramco IPO proceeds will be used by Crown Prince Mohammed bin Salman to fund his Vision 2030 initiative and transform the Saudi economy away from oil and gas.
As MbS and Aramco can claim fame to the world's largest IPO, there was very little participation from foreign institutions, hence why the kingdom incentivized domestic funds and citizens to buy the stock on the day of the IPO. Monica Malik, the chief economist at Abu Dhabi Commercial Bank, told Reuters while Ice Brent Crude futures trade around $63-$64, the kingdom needs about $87 per barrel to balance its budget.
Last month, former director of the Central Intelligence Agency David Petraeus told CNBC that he believed Saudi Arabia is "Gradually running out of money," which could explain why Aramco was rushed to IPO. Sustainability of the Aramco IPO is questionable considering international participation is weak, and the kingdom not only forced domestic buyers to load up as much as they could but also were told to use leverage.
https://www.zerohedge.com/commodities/aramco-jumps-10-ipo-market-value-hits-188-trillion
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