Ryad (AFP)

Saudi oil giant Aramco confirmed Thursday that it has raised $ 25.6 billion for what will become the biggest IPO in history.

Aramco surpasses the $ 25 billion raised by China's online business group Alibaba in 2014 when it entered Wall Street.

Sources close to the case in New York had earlier told AFP that the Saudi group had raised $ 25.6 billion at the end of the subscription period and would take its first steps on the Ryad Stock Exchange on December 12 .

The raised funds value the Saudi business at 1,700 billion dollars, far ahead of Apple (1,200 billion), Microsoft (1,140 billion) and Alibaba (1,051 billion).

However, it is less than the $ 2,000 billion targeted by Crown Prince Mohammed bin Salman on the announcement of the project four years ago, before it was postponed twice, due to adverse market conditions . Originally, the kingdom hoped to raise 100 billion dollars.

In its statement, Aramco confirmed that the company would sell - after fulfilling all legal requirements - 3 billion shares, or 1.5% of its capital, at a unit price of 32 riyals ($ 8.53). .

This is the top of the range of 30 to 32 riyals set last month the group, while the big banks advising the company in this transaction had asked the Saudi authorities to be cautious to avoid jolts during the first days of trading.

- Overestimate -

The flagship of the Saudi economy said that $ 119 billion had been subscribed, including 106 by institutional investors who had until Wednesday to make their offers, an oversubscription rate of 4.6 times the initial offer.

A moderate success compared to the introduction of the National Commerce Bank in 2014: the number of shares subscribed had then reached more than 23 times the number of titles offered to Ryad.

It is mainly the Saudis who subscribed to this operation, the major foreign investors questioning the governance, the ability of the group to protect its oil facilities and the sustainability of its benefits in the face of tougher environmental policies around the world.

Some foreign investors wonder if they will have a say in governance given the Saudi government's grip on the company, while others consider Aramco overvalued compared to rivals like ExxonMobil, Royal Shell Dutch or Chevron.

Last week, the company announced that subscriptions for individuals, ended November 28, had reached about 11.5 billion euros, with nearly five million subscribers.

To encourage the Saudis to buy securities, many initiatives had been launched, such as the facilitation of loans offered by banks and nationalist rhetoric making investment a patriotic duty.

Some of the wealthiest families in Saudi Arabia have been pushed to invest.

Aramco has also provided local investors with promises of higher dividends and the opportunity to obtain additional free shares if they hold their shares for some time. It promises $ 75 billion in dividends in 2020.

- Over-allocation -

The funds raised by Aramco during its IPO must be used to finance the diversification of an economy that is now ultra-dependent on black gold.

In its statement, the oil juggernaut announced that 450 million additional shares could be sold under an over-allotment option, which would bring the amount raised to $ 29.4 billion if it is fully exercised.

Aramco is the economic gem of Saudi Arabia and produces about 10% of the world's oil, so buying company shares is a bet on rising oil prices. The company is considered the pillar of the economic and social stability of the kingdom.

Saudi Arabia thus has every interest in seeing oil prices rise, which could be guaranteed by a further reduction in production in the 14 member countries of the Organization of the Petroleum Exporting Countries (OPEC) and their ten partners.

OPEC and the latter are conducting delicate discussions on Thursday and Friday in Vienna, Austria, to decide whether to go a step further.

In the meantime, Aramco has canceled, for the moment, the plans of introduction to the United States, Europe or Asia and renounced the plan to sell 5% of its capital.

© 2019 AFP