Saudi Aramco highest valued listed company in the world as Riyadh 'manufactures' local investment

Saudi Arabia's national oil company Aramco began trading for the first time on Wednesday and swiftly became the highest-valued listed company in the world.

The state-owned oil giant gained 10 per cent in its first moments and went on to push its value to $1.88 trillion, making it more valuable than Microsoft or Apple, two of the top listed companies in the world.

Aramco is worth more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.

The oil giant began trading on the Saudi Tadawul stock exchange after a giant $25.6 billion initial public offering, with trades beginning at 10:30am in Riyadh.

Saudi Aramco is responsible for more than 10 per cent of the world’s oil supply.

The IPO has surpassed its earlier valuation of $1.7 trillion, which had been announced when sharing pricing was disclosed last week, though the initial valuation remains below what the kingdom had targeted.

Aramco is selling 0.5 per cent of its shares to individual retail investors – most of whom are Saudi nationals – and 1 per cent to institutional investors, most of which are Saudi or Gulf-based funds.

Reports have suggested that the state has been strong-arming wealthy families and state-backed institutions into buying shares in the company following lukewarm interest from abroad.

Twitter Post

An adviser to local wealthy families told the Financial Times: "They've been told it is their duty [to invest], and everyone understands what that means."

Another added: "With enough arm-twisting, the government should be able to reach that level."

There were reports that the prince, who led a shakedown of top royals and businessmen during an anti-corruption sweep in 2017, also pressed wealthy Saudis to contribute.

The result was that just over 5 million individuals, nearly all of them Saudi nationals out of a population of around 20 million citizens, generated subscriptions of $13 billion.

"If I don't invest people will say 'I am not patriotic'," a Riyadh-based businessman told AFP earlier this week.
Aramco CEO Amin Nasser told CNBC at the stock exchange, that the company was happy with the results.

"We are progressing based on what was decided, which is to (price) Aramco at 32 riyals per share, which was agreed based on full analysis and evaluation," Nasser said.

"We are happy on the results today. And you have seen the market responds to our results, the company will 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. At the same time we continue our growth strategy, increasing profitability across cycles."

Despite the record-breaking numbers, regional and market experts have said the valuation is a "hollow win" and said local investor demand was "manufactured".

The ultra-conservative nation is divided on whether or not the IPO is considered "halal" with one religious cleric, Abdullah Al-Mutlaq decreeing that it was permissible in Islam.

Another influential cleric, Abdelaziz al-Fawzan, who campaigners say was arrested last year, claimed in a video that resurfaced recently on social media, that part of the IPO was not in line with Islamic principles.

"I want to subscribe (to the IPO) but... Fawzan says it's usury and Mutlaq says it's halal. We are lost between them," said one Twitter user.

Malaysian state energy company Petronas, which was expected to invest, said in a statement that "after due consideration the company has decided not to participate in Aramco's (IPO) exercise".

Saudi Aramco is seeking to purchase insurance to cover against war and terror attacks months after a drone and missile attack on two of its oil facilities.