Boost for Saudi Arabia as Aramco shares surge 10% on debut

Close in on $2tr valuation long sought by Saudi crown prince

RIYADH: Saudi Aramco shares surged the maximum permitted 10% above their IPO price on their Riyadh stock market debut on Wednesday, closing in on the $2 trillion valuation long sought by Saudi Crown Prince Mohammed bin Salman.

The shares leapt to 35.2 riyals ($9.39) each, up from the initial public offering (IPO) price of 32 riyals and at the daily limit of price moves allowed by the Tadawul exchange.

That gives the state-owned oil giant a market value of about $1.88 trillion, comfortably making it the world's most valuable listed company, although it will have one of the smallest "free floats" of publicly tradeable shares, at just 1.5%.

The market value is more than six times that of US oil major Exxon Mobil Corp; more than twice the size of Saudi Arabia's annual gross domestic product; and far ahead of US tech giant Apple's market value of about $1.2 trillion.

Saudi Arabian Oil Co (Aramco) raised a record $25.6 billion in its IPO last week, the culmination of a years-long effort by the Crown Prince to open up the energy giant to outside investors and raise funds to help diversify the economy away from oil.

The flotation, a major challenge for the Riyadh stock exchange, propels the bourse into the world's top 10 by value of listed companies.

But Saudi Arabia relied on mainly domestic and regional investors to buy Aramco shares after lukewarm interest from abroad.

"This is a successful IPO and the Aramco listing will add depth to the local market by providing exposure to a vital sector of Saudi Arabia's economy," said Bassel Khatoun, Managing Director, Frontier and MENA at Franklin Templeton Emerging Markets Equity.

"We are hopeful that Saudi Aramco uses the Tadawul listing as a springboard to an eventual international listing."

Finance Minister Mohammed al-Jadaan told Reuters the bulk of the IPO proceeds would be used on domestic projects, while the global buzz around the listing would help attract foreign capital into the Saudi economy.

Aramco shares began trading half an hour after the market open as the bourse allowed extra time for investors to place bids in the "opening auction" in anticipation of high demand.

Aramco Chairman Yasir al-Rumayyan and Tadawul's top executives rang the bell to start trading. Within the first hour, 766.8 million shares had changed hands, more than for any other Riyadh listed stock.