Published:  02:17 AM, 13 January 2020

Aramco's 'greenshoe option' pushes IPO to record $29.4b

Aramco's 'greenshoe option' pushes IPO to record $29.4b Participants attend the official ceremony marking the debut of Saudi Aramco's initial public offering (IPO) on the Riyadh's stock market, in Riyadh, Saudi Arabia, December 11, 2019. -Reuters

Saudi Arabian oil giant Aramco announced Sunday that its initial public offering raised a record $29.4 billion, a figure higher than previously announced, after the company used a so-called "greenshoe option" to sell millions more shares to meet investor demand.The company said that the sale of an additional 450 million shares took place during the initial public offering process, reports Reuters.

The oil and gas company, which is majority owned by the state, began publicly trading on the local Saudi Tadawul exchange on Dec. 11. It hit hit upwards of $10 a share on the second day of trading.

This gave Aramco a market capitalization of $2 trillion, making it comfortably the world's most valuable company.Aramco's additional sales mean the company has publicly floated 1.7% of its shares. It's IPO, even before the added sales, was the world's largest ever.

The shares sold in the over-allotment option "had been allocated to investors during the bookbuilding process and therefore, no additional shares are being offered into the market today," Aramco said.

Company shares traded down on Sunday, dipping to around 34.7 riyals, or $9.25 a share, amid heightened tensions in the Persian Gulf between Iran and the United States. Aramco was a target of rising tensions over the summer when a missile and drone attack, which Saudi Arabia and the US blame on Iran, temporarily halved its production.

Sunday's trading figures value Aramco at $1.85 trillion, still well ahead of Apple, the second largest company in the world after Aramco, but below the $2 trillion mark sought by Crown Prince Mohammed bin Salman.

State-owned oil company Saudi Aramco said on Sunday it had exercised its "greenshoe option" to sell an additional 450 million shares, raising the size of its initial public offering (IPO) to a record $29.4 billion.

Aramco initially raised a $25.6 billion, which was itself a record level, in its December IPO by selling 3 billion shares at 32 riyals ($8.53) a share. But it had indicated it could sell additional shares through the over-allotment of shares.Aramco shares were flat at 35 riyals shortly after the market opened, according to Refinitiv data.

A greenshoe option, or over-allotment, allows companies to issue more shares in an IPO when there is greater demand from participants in the initial offer. Investors were allocated the additional shares during book-building, Aramco said.

"No additional shares are being offered into the market today and the stabilizing manager will not hold any shares in the company as a result of exercise of the over-allotment option," Aramco said.

Aramco shares have been volatile amid heightened tensions between the United States and Iran, which lies across the Gulf from Saudi Arabia.Aramco shares fell to 34 riyals on Jan. 8, its lowest since trading began on Dec. 11, but closed at 35 riyals on Thursday.

Thursday's closing price valued Aramco at $1.87 trillion, above the IPO price but below Crown Prince Mohammed bin Salman's coveted $2 trillion target for the IPO.

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