Saudi Arabia has pursued a commitment from wealthy Saudi citizens and regional allies to purchase shares as a gesture of solidarity and goodwill as opposed to an investment decision. The world's largest public company will now trade in Riyadh and not NY.
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RIYADH, Dec 7 ― Saudi Aramco shares will start trading domestically next Wednesday, the Riyadh stock exchange said, after the energy giant raised US$25.6 billion (RM106.4 billion) in the world's biggest IPO. Oil-producing companies met on Thursday for a conference in Vienna where they discussed reducing production to drive up global fuel and energy prices.
The share sale is at the heart of crown prince Mohammed bin Salman's plans to modernise the Saudi economy and wean it off its dependence on oil.
Reducing Saudi Arabia's dependency on oil is the backbone of its Vision 2030 reforms.
If anything, the oil markets may not be pricing that risk highly enough, some experts say - crude prices have remained stubbornly low throughout 2019 despite spiking geopolitical tensions, and sanctions and conflict wiping millions of barrels of crude off the market from major producers Iran and Venezuela. With this, the size of the IPO could increase to $ 2,940 million.
The first-half earnings of the company, which stood above United States dollars 46.9 billion, was over USD 10 billion higher against the combined earnings of Equinor, BP, Total, Shel, Chevron, and Exxon.
Climate change concerns, political risk and a lack of corporate transparency put foreign investors off the offering, forcing the kingdom to ditch ambitions to raise as much as $100 billion via an global and domestic listing of a 5% stake.
Aramco's board said the company will pay at least $75 billion of ordinary dividends in 2020, in addition to any potential special payouts.
Aramco achieved net income of US$111 billion in 2018 - equivalent to that of Apple, Google and Exxon combined.
The shares were priced at 32 riyals (US$8.53), according to a statement.
Under the Article-20 of the Capital Market Law, the Council of Ministers approved the formation of The Saudi Stock Exchange (Tadawul) on 19 March 2007.
There are no immediate plans for another listing outside of Saudi Arabia right now. There is now no information on the location of the IPO overseas.
Still, the IPO showcases the kingdom's enormous oil wealth.
Wassim Al Khatib, head of investment banking at National Commercial Bank, told Al Arabiya on Monday that Aramco exercised an option to sell 15 per cent more shares, resulting in its IPO proceeds rising to $29.4 billion. Therefore this is understandably an exciting opportunity that will excite many retail investors. Marijuana mergers and acquisitions.