Saudi Aramco shares jump in IPO, making it more valuable than Apple

Saudi Arabia’s oil company Aramco jumped 10% in its first moments on the stock market Wednesday in a dramatic debut that held until closing and pushed its value up to $1.88 trillion. That makes Aramco the largest listed company in the world, surpassing Apple.

Trading on the Saudi Tadawul stock exchange came after a mammoth $25.6 billion initial public offering that set the record as the biggest ever in history, overtaking the $25 billion raised by China’s Alibaba in 2014.

Demand during the bookbuilding period for Aramco’s IPO reached $106 billion with most of that generated by Saudi investment.

Aramco, owned by the state, has sold a 1.5% stake in the company, pricing its shares before trading at 32 Saudi riyals, or what is $8.53.

At pre-trading auction earlier in the morning, bids for Aramco had already reached the 10% limit on stock price fluctuation allowed by Tadawul. That pushed the price of Aramco shares in opening moments to 35.2 riyals, or $9.39 a share, where it held until closing at 3 p.m. 

The IPO can be counted as a success, wrote Edward Moya, senior market analyst at financial services company OANDA, in a Wednesday research note. 

“It took four years to get this IPO done, but the Saudis have successfully made the world’s largest oil producer reach a market cap of $1.88 trillion, very close to the Crown Prince’s initial goal of $2 trillion,” Moya noted, referring to Crown Prince Mohammed bin Salman.

September attack

A stunning attack in September blamed on Iran struck Aramco’s main processing facility. Still, the company remains attractive to many local investors. Aramco is worth more that the top five oil companies — Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP — combined. It also has one of the lowest costs of production, estimated at around $4 a barrel.

Internationally, however, investors have been spooked by the geopolitical risks associated with Aramco, as well as the Saudi crown prince’s policies and the stain on the kingdom’s reputation following the killing of Saudi writer Jamal Khashoggi by Saudi agents in Turkey last year.

Rather than float internationally, Aramco sold locally 0.5% of its shares to individual retail investors — most of whom are Saudi nationals — and 1% to institutional investors, most of which are Saudi and Gulf-based funds.