Saudi Aramco hit the US$2-trillion target sought by de facto Saudi leader Crown Prince Mohammed bin Salman on Thursday as its shares racked up a second day of gains, despite some skepticism about the state-owned oil firm’s value.
Aramco’s initial public offering (IPO) is the centerpiece of the Saudi crown prince’s vision for diversifying the kingdom away from its oil dependence by using the US$25.6-billion raised to develop other industries.
But that is well below his 2016 plan to raise as much as US$100-billion via a blockbuster international and domestic IPO. Riyadh scaled back its ambitions after overseas investors balked at the proposed valuation and only 1.5 per cent of Saudi Arabian Oil Co (Aramco) shares were listed on the Riyadh stock exchange on Wednesday, a tiny free float for such a huge company.
Aramco shares hit 38.7 riyals (US$10.32), lifting its market value above US$2-trillion and closed at 36.8 riyals, a rise of 4.5 per cent from Wednesday’s close and valuing the company at US$1.96-trillion, Refinitiv data showed.
While a 10 per cent jump in the stock on its debut, the maximum allowed by the Riyadh exchange, was hailed by the Saudi government as a vindication, support was largely from loyal Saudi and Gulf rather than overseas investors.