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Saudi Aramco has managed to sell 450 million additional shares through an over-allotment option, which is also known as a “greenshoe option”.
Saudi Aramco is a Saudi Arabian national petroleum and natural gas company. In December 2019, the company in its IPO initially raised $25.6 billion which already then was a record-setting number. They sold 3 billion shares worth $8.53 (or 32 riyals) a share. Already at the beginning of the IPO, the company stated that they might sell additional shares through the greenshoe option. It’s also called over-allotment of shares, which means that companies are allowed to issue more shares in the case of a great demand from the IPO participants.
Aramco says that the additional shares have been allocated to investors during the book-building process.
“No additional shares are being offered into the market today and the stabilizing manager will not hold any shares in the company as a result of the exercise of the over-allotment option,” explained Aramco.
The price of Aramco shares has been pretty volatile in the last weeks. Mainly it could be explained by the geopolitical tensions between the United States of America and Iran. The price of Aramco shares declined to an all-time low since it was issued on December 11. It reached 34 riyals on January 8 but managed to climb back to 35 riyals on Thursday, January 9.
Additionally, the closing price on Thursday valued the oil company at $1.87 trillion which is above the initial IPO price – $1,7 trillion. However, the Crown Prince Mohammed bin Salman had predicted that Aramco will reach a $2 trillion target.
And it did. Although on a Saudi stock exchange and two days after the IPO, but it did. As CoinSpeaker previously reported, the price of one share briefly humped by 10% to 38.7 riyals but it returned to previous levels of 37 riyals as the market opened. It was noted to be the largest-ever initial public offering on record by any account and shares started trading at an initial value of 32 riyals when the markets opened.
Aramco has made history as its offering has become the biggest-ever IPO with $25.6 billion raised. Even with the valuation of $1.7 trillion (as the initial price for shares was established at the level of 32 riyals a share), the company has overtaken such tech giants as Apple and Microsoft in the ratings of the most valuable listed companies.
“We are happy with the results today. And you have seen the market responds to our results, the company will continue to be the leader globally when it comes to the energy sector and at the same time, we are looking at sustained and growing dividends to our investors. At the same time we continue our growth strategy, increasing profitability across cycles,” commented Aramco CEO Amin Nasser.
In addition, the rumors are that among the investors there are the richest families from Saudi Arabia. And they strongly believe that the stock will and should increase thanks to incentives that include bonus shares. However, let’s not forget that in any case investments in Aramco are related to some risks starting with those that are obvious for the gas and oil industry in general and end up with security risks (in September there was a drone attack on Aramco’s oil production and now the U.S. and Iran tensions).
It’s also worth mentioning that according to the promises of Aramco, bumper dividend payments are going to last for at least a couple of years until 2024 and will represent a minimum of $75 billion per year.