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Saudi Arabia’s government itself sank nearly US$2.3 billion in the record-beating initial public offering of the Kingdom’s oil giant Aramco, according to one of the lead managers of the deal, which was aimed at attracting fresh funds into the Saudi economic diversification.
Saudi Arabia’s government institutions represented 13.2 percent of the institutional investors, according to lead manager Samba Capital, as quoted by Bloomberg.
Institutional investors collectively took 1 percent of Saudi Aramco in the IPO, while another 0.5 percent of the oil giant was sold to retail investors in Saudi Arabia.
Less than a quarter, or 23 percent, of the institutional portion of Aramco’s IPO went to non-Saudi investors, the head of Investment Banking at National Commercial Bank, Wassim al-Khatib, told Al Arabiya news channel on Monday.
Saudi Arabia has had to rely on domestic interest in its oil giant, and possibly on large institutional investors from its Persian Gulf friends, as foreign fund managers have not been too keen to invest in the world’s most profitable oil company.
The Saudi Public Pension Agency was allocated shares which equal 11.5 percent of the institutional tranche of the IPO, al-Khatib told Al Arabiya.
The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, will spend “a lot” of the US$25.6-billion proceeds from the IPO for local large-scale investments, which could otherwise be too steep for the private sector to handle on its own, Saudi Arabia’s Finance Minister Mohammed Al Jadaan told Bloomberg in an interview earlier this week.
Although the US$1.7 trillion valuation in the IPO would make Aramco the most valuable listed company in the world, the valuation will still be US$300 billion short of the coveted US$2 trillion that Saudi Crown Prince Mohammed bin Salman has sought for years.
Following the largest IPO in history, Saudi Aramco’s shares will now be listed and start trading on the main market of the Saudi oil exchange on Wednesday, December 11, the Saudi Stock Exchange, Tadawul, said last week.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.