Saudi Arabia has listed the world's most profitable company on the stock market in what is currently the world's largest IPO. Right now, shares are only being traded on the Tadawul Exchange in Riyadh.
Saudi Arabia listed state oil company Aramco on the stock exchange on Wednesday in what became the world's biggest-ever initial public offering.
Shares opened at 35.2 riyals (€8.47, $9.39), 10% higher than the IPO price of 32 riyals. The increase was capped by the regulatory limit of 10% per day for the stock.
This values the company at $1.88 trillion, below the $2 trillion valuation that Saudi Crown Prince Mohammed bin Salman had initially hoped for.
Public trading on the domestic stock market Tadawul began after Aramco raised $25.6 billion with the sale of 3 billion shares. It subsequently sold another 450 million shares, boosting the value offering to $29.44 billion.
This meant that Aramco effectively sold 1.725% of its shares instead of the initial 1.5%.
"This IPO will enhance the company's governance and increase its transparency standards," Aramco Chairman Yasir al-Rumayyan said on Wednesday.
Funds for diversification
The IPO is part of an ambitious plan championed by the Saudi Arabian crown prince to diversify the country's economy away from its current huge dependency on oil, with some 80% of overall revenues in the state still coming from oil at the moment.
"There's a lot of reasons to go public now," the global head of Currency Strategy and & Market Research at FXTM, Jameel Ahmad, told DW.
"Profits from the IPO will largely be reinvested in rebuilding Saudi Arabia's economy," he added. "While today you associate Saudi Arabia with oil, you'll in the future think of it as a business hub, a finance hub and a tourist destination."
aw,hg/stb (AFP, Reuters, AP)