Bloomberg: Aramco Sees Nearly Enough Early Orders to Pull Off IPO

IPO banks indicate institutional portion almost covered, Bloomberg said.
  • IPO banks indicate institutional portion almost covered, Bloomberg said.

Saudi Aramco’s bankers are seeing sufficient early demand to pull off the state oil giant’s IPO just three days after launching the deal, specialists said.

The high turnout from Saudi family businesses is an incentive for individual investors to invest in the IPO, which runs until December 4.

  • Aramco IPO’s bank offering fees will not exceed $90mn, Bloomberg reported.

Investing institutional turnout is expected to boost individual investors’ turnout.

The final offer price is scheduled to be set on December 5

In a related development, Reuters said that more than 25 banks appointed by Saudi Aramco as underwriters will charge low fees compared to the size of the offer, not more than maximum of $90mn.

Banks will charge 35 basis points of the funds received, Reuters said. This is equivalent to $90mn, if priced at the ceiling of the declared range, to raise $25.6bn.

By comparison, Alibaba raised $25bn from its public offering in New York, paying $300mn to 35 banks.

Aramco announced last Sunday to determine the IPO’s price range and the beginning of the period of book building for the investing institutions and individual investors.

While, the official announcement of the offering price of the subscribed shares will be on December 5, where the price range of the offering has been set between SAR30 to SAR32 per share.

The final offering price is expected to be set at the end of the order book building period. The individual investors segment will be priced at SAR32 per share, the upper limit of the price range.

Where the final offering price is less than SAR32, individual subscribers, in respect of the difference between the upper limit of the price range and the final offering price, shall have the option of: (a) Obtaining the cash surplus by reimbursing the individual subscriber; or (b) The possibility of allocating additional shares to the individual subscriber.