Why is Saudi Aramco's trading important
Aramco: This is how the oil giant went public
It's about defending the world's greatest treasure, two trillion dollars. It is about an autocratic kingdom that wants to slowly decouple itself from oil and to do so has to earn a good reputation in the financial world. Last but not least, there is a lot of money involved. Nothing can go wrong there. And so the initial public offering of the Saudi Aramco group was orchestrated almost like a general staff. From the kingdom itself, from the banks and even from the entire Organization of the Petroleum Exporting Countries (OPEC).
The start of the world's largest IPO was correspondingly unspectacular: The shares of the Saudi Arabian state-owned company debuted on Wednesday at 35.2 riyals on the Riyadh stock exchange. That is an increase of ten percent compared to the issue price of 32 riyals (equivalent to $ 8.53). If prices usually fluctuate violently after a stock market debut because some investors want to take profits quickly and others want to jump on the bandwagon, the stock did not move a millimeter after rising to 35.20 riyals.
There is a daily limit of ten percent on the Saudi stock exchange, and that was reached right at the start. Experts expect the share to rise further in the coming days. The IPO was oversubscribed 4.7 times. On the first day of trading, there was a demand for 200.5 million shares at a price of 35.20 riyals, but only 27 million shares changed hands at this price.
The kingdom and the banks had deliberately kept the supply of paper small in order to keep developments under control. Only 1.5 percent of the shares were listed on the stock exchange. Domestic buyers have been generously promised bonus shares if they kept the papers for at least six months. The Wall Street bank Goldman Sachs was hired as stability manager for the IPO and was supposed to secure the process by controlling the shares issued.
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