Saudi Aramco jumps 10%, closes limit-up in stock market debut

Saudi Aramco shares rallied 10% on Wednesday in their debut on Riyadh’s Tadawul stock market giving the group a market value of nearly $1.9trn.

The petrochemical giant's flotation marked the culmination of a nearly four-year process since Crown Prince Mohammed bin Salman, the Saudi heir apparent, first disclosed plans to pursue a listing.

Saudi Aramco raised $25.6bn in the largest IPO ever on any exchange, surpassing the $25.0bn raised by China’s Alibaba when it debuted on Wall Street in 2014.

The company’s shares rose by the maximum allowed daily limit on the Tadawul with the last bids coming in at 35.2 riyals, in the process confirming its position as the world’s most valuable company.

Although the resulting market valuation had already reached nearly a whopping $1.9trn, officials were pushing to achieve Prince Mohammed's long sought-after $2trn valuation.

Chairman Yasir al-Rumayyan said on Wednesday: “The government was the only shareholder. Today, the company has more than 5m shareholders. Today, all Saudi Aramco employees and every person in the kingdom has the right to be proud. This IPO is considered the largest IPO in the history of humankind.”

The IPO received $119.0bn of orders with the listing nearly 4.7 times oversubscribed and should the Kingdom exercise the its so-called 'greenshoe option' it could raise $29.4bn.

Nonetheless, Riyadh chose to pare back its initial ambitions to raise $100.0bn from the sale of 5.0% of the company's equity on an international stock exchange, opting instead to sell just 1.5% of the company through a listing largely dependent on local investors and state funds in the Gulf.

"A listing in Riyadh with mostly domestic investors doesn’t have the prestige of an international listing in New York or London. But there is no denying the numbers. Saudi Arabia has made its mark in public markets. The listing was over four times subscribed so the first day always looked like it was going to be strong," said London Capital Group's Head of Research, Jasper Lawler.

"Whether enthusiasm holds up longer term will in part rest upon the host nation’s ability to stay relevant for the world's future energy needs. The oil industry needs to adapt to higher supply from the United States and calls for lower fossil fuel use because of climate change. Given the challengers, it is not impossible that this is the high watermark for Aramco."