Saudi Arabia’s oil giant and the world’s most profitable company Saudi Aramco raised $25.6 Billion from its share sale. It is a new record surpassing the previous record held by Alibaba, which raised $25 Billion in 2014 in New York.
Although the overseas interested was hot and cold the domestic investors were bullish and the majority of the companies 1.5% shares were bought by the locals. When the trading begins the total value of the shares will be $1.7 Trillion making it the most valuable listed company globally. The total value of $1.7 Trillion fell short of the target of picking up $2 Trillion.
The main purpose of the share sale is to liberalize the Saudi economy and free up from its dependence on oil. Saudi Arabia requires billions of dollars to fund its projects and start new industries. Previously Aramco’s plan was to raise around $100 Billion by listing it on two stock exchanges, the country’s own Tadawul stock exchange and the other on a foreign stock exchange.
But it had to trace back its plans after investors abroad were more concerned about climatic change, lack of corporate transparency and political risk in the country. After not getting a warm response from the investors abroad, Aramco focused its marketing efforts on the local residents and other Gulf allies. Banks in Saudi Arabia also offered cheap credit to the people to bid for the shares of the company.
The shares were valued at $8.53 on Thursday and are highly oversubscribed according to the reports. It remains to be seen whether the price of the shares rise further or falls when the trading begins sometime later this month.
The oil sector is currently undergoing huge pressure due to the global volatility in oil prices so the allies in the Gulf region that pump more than 40% of the world’s oil have decided to cut their outputs to increase the oil prices globally.
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