RIYADH: Institutional investors have put in 144.1 billion riyals ($38.4 billion) worth of bids for Saudi Aramco’s planned initial public offering (IPO), equivalent to more than twice the number of shares on sale, financial advisers for the IPO said on Monday.
The book-building process for allocating shares to institutional buyers – typically asset managers, insurers or pension funds – began on November 17 and investors have until December 4 to place orders. Aramco plans to sell 1.5pc of its shares in a deal that could raise up to $25.6 billion.
The state-owned Saudi oil giant has received subscription orders for around 4.6 billion shares so far from institutions, Samba Capital, NCB Capital and HSBC Saudi Arabia said.
Although the IPO has received more than enough bids, the level of interest so far is relatively muted compared with other emerging market IPOs, including the listing of a top Saudi bank in 2014 that was oversubscribed many times over.
Aramco has previously said 0.5pc of the offering will be allocated to retail investors, leaving 1pc – or 2 billion shares – for institutional buyers.
The deal could be the world’s biggest IPO if it tops the $25 billion listing of China’s Alibaba in 2014.
The lead managers didn’t provide a breakdown of the institutional investors, but in a separate statement last week Samba Capital said the bulk of orders came from Saudi companies and funds, while foreign investors accounted for just 10.5pc of the offers as of November 28.
The retail tranche, which closed on that date, attracted bids worth 47.4 billion riyals, equivalent to around 1.5 times the number of shares offered.
Riyadh scaled back its original IPO plans, scrapping an international roadshow to focus instead on marketing the offering to wealthy Gulf Arab allies. It has stayed quiet on when or where it might list the stock abroad.
The deal is the centrepiece of Crown Prince Mohammed bin Salman’s plans to diversify the Saudi economy away from oil.