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Market experts foresee success for Aramco’s IPO

Market experts foresee success for Aramco’s IPO
The IPO began today and will continue until 4 December

By: Bedour Al Raee 

Riyadh – Mubasher: Market analysts are expecting huge success for the Saudi Aramco initial public offering (IPO), which could be the biggest in history, thus taking the Saudi Stock Exchange (Tadawul) into a new stage and attracting new investments.

The IPO began today and will continue until Wednesday 4 December.

Aramco announced the price range of its IPO on the Saudi Stock Exchange (Tadawul) between SAR 30 and SAR 32. Each individual investor who subscribes to the offer shares must submit a retail subscription form and must subscribe for a minimum of 10 offer shares calculated at the final offer price per share.

The offering represents about 1.5% of the company’s capital, valued at SAR 60 billion, distributed over 200 billion shares.

Economic analyst Mohamed Al Maymouni said that with Tadawul enjoying high levels of liquidity as a leading regional market, the IPO will succeed, noting that it is hard to expect the subscription level.

Meanwhile, financial analyst Qassim Al Ali expected an oversubscription covering the IPO five times, which reflect the IPO’s success across global markets.

With the SAR 30-32 price range coming below previous forecasts of SAR 37.5, shareholders of 1,000 shares or less will benefit as the cost of keeping the share for six months will be less, as well as obtaining 10% bonus shares, noting that the average cost will be at SAR27-29.

Every Saudi investor will be entitled to a 10% bonus share, one bonus share for every 10 shares, subject to keeping the shares for 180 days after listing the stock.

The Saudi stock market has lacked IPOs for more than five years, especially since the IPO of the National Commercial Bank (NCB), explained financial consultant Ali Al Jaafari, who pointed to the great interest in investing in the oil giant, which enjoys profits four times that of all the Tadawul-listed companies combined.

Al Maymouni ruled out the IPO affecting liquidity levels in the market, remarking that it could help TASI move to new highs, exceeding the 10,000-point level, witnessing a surge similar to that when the telecom sector companies were listed on Tadawul.

Financial analyst Omar Manee told Mubasher that the price range is very suitable to investors, with decent dividends. From a risk management point of view, Manee said that the stock will be linked to the fluctuating crude oil prices, which makes a necessity to diversify the portfolio.

Moreover, Economic expert Ahmed Al Shouhari referred to Aramco’s other plans with another IPO to attract more investment into the Saudi economy.