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Saudi Aramco IPO value to rise to USD29.4 bil with exercise of over-allotment option

January 14/2020

MOSCOW (MRC) -- Saudi Aramco's IPO will now be valued at USD29.4 billion with the exercise of the over-allotment option granted by the government in what is the world's biggest flotation, reported S&P Global.

Aramco had initially raised USD25.6 billion by selling 3 billion shares priced at Riyals 32 (USD8.53), but with the over-allotment option an extra 450 million shares will be added to the offering at the share price of Riyals 32, the company said Sunday in a statement on the local stock exchange, Tadawul.

"The 450,000,000 shares subject to the over-allotment option had been allocated to investors during the bookbuilding process and therefore, no additional shares are being offered into the market today," Aramco said.

Aramco's IPO, which came after two years of delay, beat the previous record held by Chinese e-commerce giant Alibaba, which raised USD25 billion in 2014.

Aramco's shares are up by 9.4% since their December 11 listing.

The shares dipped slightly last week amid tensions between Iran and the US, stoking investor fears of war in the region.

Aramco's IPO is part of the kingdom's Vision 2030, a roadmap to weaning the kingdom off oil income.

As MRC informed previously, Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, has been running its local refineries at full capacity since November 2019 and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia in 2020. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.

The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, ethylene, petrochemistry, Petronas, PRefChem, Saudi Aramco, Malaysia, Russia, Saudi Arabia.
Category:General News
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