Aramco Increases IPO Amount to $29.4 Billion... Sets New Global Record Again

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[Asia Economy Reporter Hyunwoo Lee] The initial public offering (IPO) subscription amount of Saudi Arabia's state-owned oil company Aramco has once again set a record high. Goldman Sachs, the lead underwriter for Aramco's listing, exercised the overallotment option (Greenshoe), increasing the subscription amount from $25.6 billion (approximately 29.73 trillion KRW) to $29.4 billion (approximately 34.14 trillion KRW). This move is interpreted as an effort to stabilize the volatile stock price amid escalating tensions between the U.S. and Iran and to attract investor interest. Although Aramco's stock price remains above the IPO price, it plunged sharply after news of Iran's airstrike on U.S. military bases in Iraq, falling more than 8% from last month's peak.

According to foreign media including Bloomberg on the 12th (local time), Goldman Sachs, the lead underwriter for Aramco, announced it would exercise the overallotment option for 450 million shares, equivalent to 15% of the IPO shares. As a result, Aramco's subscription amount increased from $25.6 billion to $29.4 billion, setting a new record high once again. Aramco's subscription amount had already recorded the world's largest scale at the start of trading on the 11th of last month. Aramco offered 3 billion shares, accounting for 1.5% of the total shares before listing on the Saudi Tadawul Exchange, with an IPO price range set between 30 riyals (approximately 9,230 KRW) and 32 riyals (approximately 9,850 KRW).

The background of this overallotment option is interpreted as a measure to stabilize the stock price and attract investor interest. Aramco's stock price turned downward from the beginning of the year as Middle East tensions worsened due to the confrontation between the U.S. and Iran. According to the Saudi Tadawul Exchange, Aramco's stock price was 34.8 riyals (approximately 10,770 KRW) on the day, which is 8.4% lower than the post-listing peak of 38 riyals (11,760 KRW) recorded on the 16th of last month. On the 8th (local time), following news of Iran's airstrike on U.S. military bases in Iraq, Aramco's stock price dropped to 34.20 riyals but slightly recovered, yet it has not regained its peak.

Meanwhile, the overallotment option is a system that grants the lead underwriter the right to issue up to 15% additional shares beyond the IPO shares. Originating from the Greenshoe Company in the U.S. in 1963, it is also called the "Greenshoe." It is used in major capital markets such as the U.S., U.K., and Japan to increase demand for newly listed companies and reduce stock price volatility after listing.

This content was produced with the assistance of AI translation services.