What happened: Aramco, the Saudi oil giant, became the most valuable listed company in the world on Wednesday, worth $1.88 trillion, after its shares increased by 10 per cent when trading began on the Saudi Tadawul stock exchange. 10 per cent is the daily cap for share increases.
- It makes Saudi Aramco’s market capitalisation greater than that of the five biggest international oil companies combined
- 1.5 per cent of its shares were up for sale, at 32 Saudi riyals a share, or $8.53
- The CEO of Aramco, Amin H Nasser, told reporters in Riyadh: “We are happy with the results today and we have seen the market response. We 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”
Context: Aramco’s IPO comes after a saga lasting nearly four years, in parallel with and championed by Crown Prince Mohammed Bin Salman’s Vision 2030 plan to transform the Saudi economy. The initial plan, to float shares at home and abroad was jettisoned due to concerns from foreign investors about climate change, political risk, and a lack of corporate transparency. Last week the company raised a record $25.6bn in its initial public offering in Riyadh
- Bin Salman wants to use funds raised from the Aramco sale to fund his project to modernise the Saudi economy
- On Sunday the Municipal and Rural Affairs Ministry announced that women in Saudi Arabia will no longer need to use separate entrances from men or sit behind partitions at restaurants
Looking ahead: The spike in Aramco’s value is a piece of rare good news for Bin Salman’s embattled project to transform his country’s society and economy. One of the major obstacles for Aramco was the very high valuation at $2 trillion, which officials were forced to bring down to $1.7 trillion. Early evidence of trading suggests that this $2 trillion mark will be reached, helping to provide some of the funds the Saudi royal family needs to wean the country off its oil dependence.