Since the shares were still trading higher than the IPO price, Saudi Aramco profited from the greenshoe option and increased the total amount of money raised by the IPO to a mouth-watering US$29.4 billion.

By Ian Horswill


Posted on February 7, 2020

Saudi Aramco, officially the Saudi Arabian Oil Company, added an additional US$3.8 billion to its record-breaking initial public offering.

Saudi Aramco raised US$25.6 billion through the world’s biggest IPO in early December, selling 3 billion shares at 32 riyals (US$8.53) each.

Saudi Aramco set aside another 450 million shares for investors and waited to see the demand for the shares after the Initial Public offering pre-IPO demand. Advising bank Goldman Sachs held the shares during Aramco’s first month of public trading, Saudi Aramco said in a statement.

The additional allocation of shares depended on Saudi Aramco’s stock remaining above its offer price. The additional shares, known as a greenshoe option, were set aside for 30 days after Aramco’s December 11 IPO in case the government sought to buy back stock and lift the share price.

Saudi Aramco shares made tremendous gains when it began trading at the Tadawul stock exchange on 11 December. The shares traded as high as US$10.32, taking the company’s valuation past the US$2 billion sought by Saudi Arabian crown prince Mohammad bin Salman. The shares today traded down at 33.40 riyals (US$8.90).

Saudi Arabia ruler

Since the shares were still trading higher than the IPO price, Saudi Aramco profited from the greenshoe option and increased the total amount of money raised by the IPO to US$29.4 billion.

The decision to float the company on the stock exchange was to fund Mohammed bin Salman’s ambitious economic reform agenda by raising billions to build non-energy industries and diversify revenue streams.

Saudi Aramco’s oil refineries were bombed on 14 September last year. The company’s Abqaiq and Khurais plants were temporarily put out of action, stopping the production of 5.7 million barrels per day – more than 5% of global oil supply.

Fears of conflict have since faded following Iran’s failed missile strikes on Iraqi bases housing US and Coalition forces after the US assassinated top Iranian commander Qasem Soleimani by a drone strike in Baghdad. US President Donald Trump said after Iran’s attack on Iraqi bases that the US wouldn’t retaliate.