RIYADH, Dec. 7 (Xinhua) -- Oil giant Saudi Aramco priced its initial public offering (IPO) at 32 riyals (8.53 U.S. dollars) per share on Thursday, marking the biggest share listing in history and beating Alibaba's record 25 billion U.S. dollars listing in 2014.
Priced at the top of the 30 to 32 riyals range announced by Aramco at the beginning of the book-building process, the Saudi oil giant will raise 25.6 billion dollars from the IPO and have a market valuation of 1.7 trillion dollars, surpassing Apple as the most valuable listed firm in the world.
According to a statement by Aramco on Thursday evening, Saudi and regional investors generated strong demand. Institutions and individual investors bid a total of 119 billion dollars, applying for nearly 5 times the 3 billion shares on offer.
The state oil company had been offering 1.5 percent, or 3 billion, of the company's shares on the Saudi Stock Exchange Tadawul, of which 0.5 percent were allocated to retail or individual investors, and 1 percent for institutional buyers.
A market value of 1.7 trillion dollars falls short of the 2 trillion dollars valuation targeted by Saudi Crown Prince Mohammed bin Salman when he first revealed his ambition to sell shares in Aramco back in 2016.
Saudi Energy Minister Abdulaziz bin Salman said on Friday in Vienna that Saudi Aramco may float on the stock market at a valuation below the 2 trillion dollars the kingdom initially targeted, but it will soon rise above that level on the open market.
Abdulaziz said this week's milestone pricing was a "proud day for all of us."
"We decided to lower the valuation we were seeking, but on the 11th the shares will be trading and in a few months from now... it will be higher than the 2 trillion U.S. dollars and I will bet this will happen," added.
On Friday, the Organization of the Petroleum Exporting Countries and its allied oil-producing nations (OPEC+) agreed to cut 500,000 barrels per day of oil supply in the first quarter, triggering a jump in prices.
The new cut on exports will remove another 500,000 barrels a day from world markets from next month. This comes on top of an existing deal to reduce supply by 1.2 million bpd from October 2018 levels.
Analysts said that now that Saudi Aramco is to become publicly traded, the share price of the state-owned oil giant will be of primary consideration to its executives and its shareholders and the Saudi government will seek higher oil prices to bolster the share price.
The new move by OPEC and its allied oil exporters to limit production will help achieve these higher oil prices. However, Abdulaziz said that an agreement to further cut global oil supply wasn't intentionally timed to coincide with Aramco IPO.
Aramco's IPO plans had been often delayed. In March, the state-owned company purchased a 70 percent stake worth 69 billion dollars in Tadawul-listed petrochemical firm Saudi Basic Industries Corp (SABIC), which is set to help Aramco become a big player in the global chemical industry.
The acquisition of SABIC and Aramco's sale of 12 billion dollars bonds in April earlier this year were among the main factors behind the IPO's delay, according to officials.
The Aramco IPO is the centerpiece of Saudi Vision 2030, the kingdom's blueprint to wean off its reliance on oil and diversify its economy. The proceeds from the IPO will go towards these diversification initiatives and could be invested in sectors such as logistics, manufacturing and tourism.
Saudi King Salman bin Abdulaziz Al Saud said during a Shura Council opening session in November that the revenues of the Aramco IPO would be channelled to Saudi sovereign wealth fund to boost investment inside and outside the kingdom.
Aramco's IPO would greatly enhance the size of the Saudi financial market in line with advanced international markets, Salman said.
Salman also said the kingdom is determined to carry on with its reform programs to raise its competitiveness to become one of the 10 most business-friendly countries in the world.
Analysts said after the IPO, Saudi Aramco would achieve its objectives of enhancing the sustainability of its business, taking advantage of technology and innovation to increase the efficiency of production of crude oil and gas, and raise the level of reliability and sustainability. Through comprehensive and disciplined capital expenditure procedures, Saudi Aramco maintained itself through the decades.
The company is expected to start trading on Tadawul on December 11.
