Saudi Aramco raises IPO using “greenshoe option”
Formerly known as an “over-allotment option, the greenshoe option is a favorable method which allows the underwriters to sell additional shares during an Initial Public Offering (IPO).
The state-owned oil titan Saudi Aramco revealed that it has utilized the said “greenshoe option” to sell additional 450 million shares in order to raise its Initial Public Offering up to $29.4 billion.
Aramco initially marked its IPO at the local stock exchange by raising $25.6 billion in its IPO in December by selling 3 billion shares at 32 riyals ($8.53) and notified that it would expect to raise its IPO through the over-allotment of shares.
According to Aramco, “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.”
Due to the current tension between the US and Iran, the shares of Aramco have been volatile. Shares of Aramco dropped to 34 riyals on Jan. 8, its lowest since the stock began trading on Dec. 11. However, it closed at 35 riyals on Thursday.
As reported by CNBC, Thursday’s closing price gave Aramco a value of $1.87 trillion, above the IPO price, which valued the company at $1.7 trillion, but it didn’t meet the targeted price of $2 trillion of Crown Prince Mohammed bin Salman.
(Image source: Ahmed Yosri | Reuters)