Market Overview

Saudi Aramco shares surge 10% as historic IPO begins trading

Saudi Aramco shares surge 10% as historic IPO begins trading

Saudi Aramco, the world’s largest initial public offering (IPO), surged past expectations as it debuted on the country’s stock exchange on Wednesday morning. Shares of the state-owned oil company rose to 35.2 Saudi riyals ($9.38) from 32 riyals in early deals in Riyadh, up 10% and hitting their daily limit. The price gives it a valuation of $1.88 trillion and makes it the largest listed company in the world, comfortably ahead of Microsoft and Apple.

Aramco’s public debut, which listed 1.5% of its shares locally on the Saudi Tadawul, is the biggest on record — topping the $25 billion Alibaba raised when it went public in September 2014. The oil giant has also surpassed its earlier valuation of $1.7 trillion, announced when share pricing was disclosed last week at the top of the market range. But the $1.88 trillion valuation remains below what the kingdom had initially targeted and relied heavily on local investors after the company canceled international roadshows due to lackluster foreign interest.

Ahead of the listing, Aramco detailed the vast number of risks its oil and gas business faces in a prospectus released in early November. More obvious risks include the supply, demand and price of crude or how much oil the Saudi government decides to produce, as the country is the largest producer in OPEC. Security risks remain high on that list — Aramco’s oil production was hit by drone attacks in September, which forced Riyadh to cut output by 50%. It took weeks for the Saudi government to restore capacity, though the recovery was far quicker than markets expected. Other risks include climate change and the company’s dependence on demand from Asia, its prospectus said.

Saudi Aramco shares surge 10% as historic IPO begins trading, CNBC, Dec 11

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