After multiple delays, Saudi Arabia’s ‘crown jewel,’ Saudi Aramco has made a dream stock market debut. The state-owned oil giant has raised $25.6bn in the world’s largest ever IPO. It has easily eclipsed the biggest IPO till date, that of Alibaba’s in 2014 by about $600 million.
Aramco’s market value of $1.7 trillion has also made it replace Apple (valued at around $1.2 trillion) as the world’s most valuable listed company.
Still missed expectations!
The market value of $1.7 trillion is significantly lower than the $2 trillion valuation initially hoped for by the Saudi govt.
As per analysts, this has been due to concerns over the company’s politics, its governance and environmental impact of its operations.
Riding on Arab confidence
Investors, mainly from Saudi Arabia and the Gulf, have invested heavily in Aramco’s IPO with some even taking bank loans for this purpose.
Many govt. bodies and other local institutional investors have also bought these shares.
Aramco, which made a net profit of $111 billion last year on its part has pledged to pay a dividend of at least $75 billion a year for the next five years.
But cold-shouldered by the west
The Aramco IPO has received lukewarm reception from many western investors who consider it over-valued. This has led Saudi govt. to shelve plans to list the shares in New York or London stock exchanges.
Relevant for GS Prelims & Mains Paper III; Economics