Saudi Aramco prices shares at top of range in world's biggest IPO

News Network
December 6, 2019

Riyadh, Dec 6: State-owned oil giant Saudi Aramco’s initial public offering (IPO) will be the biggest in history, but will fall short of the towering USD 2 trillion valuation long sought by Crown Prince Mohammed bin Salman.

Aramco priced its IPO at 32 riyals (USD 8.53) per share, the top of its indicative range, the company said in a statement, raising USD 25.6 billion and beating Alibaba Group Holding Ltd’s record USD 25 billion listing in 2014.

At that level, Aramco has a market valuation of USD 1.7 trillion, comfortably overtaking Apple Inc as the world’s most valuable listed firm. But the listing, expected later this month on the Riyadh stock exchange, is a far cry from the blockbuster debut originally envisaged by the Crown Prince.

Aramco did not say when shares would start trading on the Saudi stock market but two sources said it was scheduled for December 11.

Saudi Arabia relied on domestic and regional investors to sell a 1.5 per cent stake after lukewarm interest from abroad, even at the reduced valuation of USD 1.7 trillion.

Demand from institutional investors, including Saudi funds and companies, reached USD 106 billion, while retail investment’s demand hit USD 12.6 billion.

Around 4.9 million Saudi retail investors have bought shares in the oil giant, including 2.3 million aged between 31-45.

Aramco’s advisors said they may partly or fully exercise a 15 per cent “greenshoe” option, allowing it to increase the size of the deal to a maximum of $29.4 billion.

The pricing comes as the Organization of the Petroleum Exporting Countries (OPEC) is gearing up to deepen oil supply cuts to support prices, provided it can strike a deal later this week with allies such as Russia.

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 USD 100 billion via an international and domestic listing of a 5 per cent stake.

Even at a USD 1.7 trillion valuation, international institutions baulked, prompting Aramco to scrap roadshows in New York and London and focus instead on marketing a 1.5 per cent stake to Saudi investors and wealthy Gulf Arab allies. Saudi banks offered citizens cheap credit to bid for shares.

DIVERSIFY FROM OIL

The IPO is the culmination of a years-long effort to sell a portion of the world’s most profitable company and raise funds to help diversify the kingdom away from oil and create jobs for a growing population.

“The amount raised by the IPO itself is relatively contained given the size of the economy and medium-term funding requirement of the transformation plan,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

“Nevertheless, combined with other areas of funding, we believe that there is meaningful capital in place to progress with the investment plans aimed at diversifying the economy.”

The government promoted the investment as a patriotic duty, particularly after Aramco’s oil facilities were attacked in September, temporarily halving the kingdom’s oil output.

Despite the official push and offer of loans to fund share purchases, interest was relatively muted compared with other emerging market IPOs, including the listing of a top Saudi bank in 2014 which was oversubscribed many times over.

Alibaba’s listing in Hong Kong this month had bids for 40 times the number of shares on offer.

Sources have said the Abu Dhabi Investment Authority (ADIA) and Kuwait Investment Authority (KIA), sovereign wealth funds of two of Saudi Arabia’s Gulf allies, planned to invest in the deal. ADIA declined to comment, while KIA did not respond to requests for comment.

Saudi citizens were offered 0.5 per cent of the company or about a third of the offering, an unprecedented retail offering compared with previous Saudi IPOs.

Aramco has planned a dividend of USD 75 billion for 2020, more than five times larger than Apple’s payout, which is already among the biggest of any S&P 500 company.

But investing in Aramco is also a bet on the price of oil and growth in global demand for crude, which is expected to slow from 2025 as steps to cut greenhouse gas emissions are rolled out and the use of electric vehicles increases.

The IPO also carries political risk as the Saudi government, which relies on Aramco for the bulk of revenues, controls the company.

Saudi Arabia has faced international criticism after the murder of Saudi journalist Jamal Khashoggi last year in the Saudi consulate in Istanbul and for its role in a war in Yemen.

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News Network
April 23,2024

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The genocidal Israeli war on the Gaza Strip has entered its 200th day, with occupation forces killing more Palestinians in defiance of widespread international outcry to end the carnage.

The aggression marked its 200th day on Tuesday with no end in sight to the Israeli war that has so far killed a shocking number of Palestinians and led to a humanitarian crisis in the besieged territory.

The Gaza Health Ministry said Israeli forces have committed three "massacres" over the past 24 hours, killing at least 32 Palestinians and wounding 59 others.

The numbers, it added, bring the Palestinian death toll to more than 34,183, with at least 77,143 injured and an estimated 7,000 missing and presumed dead since early October.

More than 14,500 children and 9,500 women are among those killed, making up over 70 percent of the victims, according to health officials.

Israel waged its brutal US-backed war on the Gaza Strip on October 7 after the Palestinian Hamas resistance group carried out Operation Al-Aqsa Storm against the usurping entity in retaliation for its intensified atrocities against the Palestinian people.

Israel has been carrying out war crimes in Gaza by deliberately starving people and forcing their evacuation, as well as targeting hospitals and schools sheltering displaced Palestinians.

Despite all these atrocities, the regime has failed to achieve its declared objectives of “destroying Hamas” and finding Israeli captives held in Gaza.

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News Network
April 13,2024

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New Delhi, May 13: Warmongering Israel is bracing for a potential direct attack by Iran as warnings grow of retaliation for the provocative killing last week of a senior officer in Iran's embassy in Damascus. US and other intelligence assessments have said the retaliation could come as soon as Sunday. The unprecedented attack could trigger an all-out regional war.

US President Joe Biden has also warned Israel that he expects a strike from Iran soon, but has warned the clerical state not to attack.

"I don't want to get into secure information but my expectation is sooner than later," Biden told reporters after an event.

Asked what his message was to Iran on striking Israel, Biden said, "Don't."

An assault from Iranian soil has emerged as one of the main scenarios expected by the Jewish state and its allies, according to reports by the Wall Street Journal and Bloomberg. A bombardment with drones and precision missiles could come within the next 24 hours, the reports said citing people familiar with the matter.

Any Iranian attack on Israel would likely be a combination of missiles and drones, based on current capabilities outlined in a new Defense Intelligence Agency Worldwide Threat assessment released late Thursday.

The regime "has a substantial inventory of ballistic and cruise missiles capable of striking targets as far as 2,000 kilometers from its borders," the agency said.

The US has rushed additional military assets to protect Israel and American forces in the region. The country has moved two Navy destroyers to the Eastern Mediterranean Sea, according to a Navy official. One is the USS Carney, which was recently in the Red Sea performing air defence against Houthi drones and anti-ship missiles.

America has also doubled down its diplomatic efforts to rein in hostilities in the region, which has been on the edge since Israel launched a mega offensive on Palestine to destroy the militant organisation Hamas.

US officials have been working to send messages to Iran, including through an established Swiss channel, while talking to Israel, Saudi Arabia, Qatar, and other governments. Biden has also sent the head of US Central Command, General Michael Kurilla, to Israel for urgent talks on the threat from Iran.

The 'shadow war' between the two Middle Eastern countries heated up when an Israeli airstrike hit the Iran consulate in Damascus, killing seven people, including two generals. Iran immediately issued a statement saying that it is prepared for war and will deliver a "slap" to Israel.

Israel has been on alert since then, canceling home leave for combat troops, calling up reserves, and bolstering air defenses. Its military scrambled navigational signals over Tel Aviv on Thursday to disrupt GPS-navigated drones or missiles that might be fired at the country.

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April 15,2024

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The Iranian Army Chief Commander Major General Abdolrahim Mousavi says the country will not hesitate to give a “stormy and unified” response to any act of aggression against it.

In a Monday message marking the National Army Day, Mousavi said great defensive measures of the country’s Army and Armed Forces have resulted in strong deterrent power.

Iran has conveyed its message of power to the world in a way that the world has realized that the Iranian Armed Forces will give a “stormy and unified” response to any aggression against the country’s national interests, borders and security, he added.

The top commander noted that Iran’s firm response to an act of aggression by the usurping Israeli enemy against its diplomatic premises in the Syrian capital of Damascus brought joy to oppressed nations, especially the resilient people of Palestine and Gaza.

Mousavi emphasized that the retaliatory strikes, dubbed Operation True Promise, revealed only a part of the capacity and strong will of the Iranian Armed Forces and were carried out in cooperation among the Islamic Revolution Guards Corps (IRGC) Aerospace Division, the Army, and the Defense Ministry.

He said the Army has played a key role in strengthening the country’s defense power, independence and lasting security by implementing various measures.

It has constructed strategic drone and underground tactical bases and made hundreds of modern defense achievements in the land, air, sea and space sectors in addition to advancing in the fields of science and technology, he explained.

Now the enemies lack the courage to carry out any act of aggression against the Islamic establishment and the noble Iranian nation, the top commander said.

He added that Iran has staged several joint military drills to enhance national security and dignity.

The Israeli airstrikes on Iran’s embassy compound in Damascus killed two generals of Iran’s Islamic Revolution Guards Corps (IRGC), Brigadier General Mohammad Reza Zahedi and General Mohammad Hadi Haji Rahimi, as well as five of their accompanying officers.

In response, on Saturday night, the IRGC targeted the Israeli-occupied territories with a barrage of drones and missiles. The extent of the damage on Israeli military bases across the occupied territories is yet to be specified.

Following the reprisal, Iran warned Israel against taking any retaliatory actions and also urged the US to try not to involve itself in the conflict and signaled that it viewed the matter as “concluded.”

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