Aramco exercises greenshoe option, taking IPO to US$29.4 bln

January 13, 2020 09:23
Aramco has exercised the over-allotment option in its IPO, boosting the size of the deal to a new record. Photo: Reuters

Saudi state oil giant Aramco said on Sunday that it has exercised the greenshoe option to sell an additional 450 million shares, raising the size of its initial public offering (IPO) to a record US$29.4 billion, Reuters reports.

Aramco initially raised a US$25.6 billion, which was itself a record level, in its December IPO by selling 3 billion shares at 32 riyals (US$8.53) a share. But it had indicated it could sell additional shares through the over-allotment of shares.

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, Saudi 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,” it said.

Aramco shares have been volatile amid heightened tensions between the United States and Iran, which lies across the Gulf from Saudi Arabia.

The 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 US$1.87 trillion, above the IPO price but below Crown Prince Mohammed bin Salman’s coveted US$2 trillion target for the IPO, Reuters noted

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