Finance Assignment

“Saudi Aramco IPO Hits $ 2 Trillion Mark Amid

Guarded Forecast”.

 Executive Summary: - The case is about the Saudi Stock exchange.

 Background: - It has emerged as the most valuable publicly traded company in

history. The Saudi stock exchange December 11, the valuation of the national oil
giant jumped to $ 2 Trillion to a surge on the first day of trading with a 10% increase
in shares prices. Saudi Aramco began trading at 32 riyals ($ 8.53) and stands at 36.70
riyals ($ 9.78) as of this writing. The Expectation were high for the initial public
offering (IPO) from the most profitable company in the world. The oil giant
responsible for 10% of global oil production and adding $ 111 billion to the kingdom
economy is 2018. Aramco was an exciting prospect from many investors from the
beginning. Its announced in 2016, the Saudi Aramco IPO has faced several setbacks
and delays. International bankers have long warned the kingdom that a $ 2 Trillion
valuation was optimistic at best, with most putting Saudi Aramco’s valuation at $ 1.7
Trillion it entered the market last week. Aramco was able to achieve record –
breaking value. Experts 75% of the institutional money in the Aramco IPO comes
from Saudi Company fund and government agencies. The 97% of the retail investors
are exclusively from Saudi Arabia and the Gulf highlighting Aramco deficit of global
investment. A lower valuation by global financials forced Saudi Aramco executive to
shift focus away from foreign investors the primary target of the IPO to local
investors in Gulf region.

 Problem: - The stock experienced a 0.7% dip Tuesday morning its first decline since
the IPO launch shares are still an impressive 18% above the open price. Its
announcement in 2016, The Saudi Aramco IPO had faced several setbacks and delays.
Valuation of the IPO faced uncertainty due to low oil prices, climate change concern
and geopolitical unrest in the region. In stock market $ 25 Billion is a far cry from the
initially anticipated $ 100 Billion current investment still lacks the international
diversification sought by executive. The national Oil company is still not trading on
prominent western stock exchanges in London and New York and overwhelming
local and regional participation raises questions about the long – term sustainability.
New York-based ratings agency Fitch also reduced the country’s credit score from A+
to an A – citing geopolitical and military risks in the region. Closer inspection the
valuation appears to be regionally limited. It faces significant geopolitical and market
headwinds. The real test for Aramco will come as stakes become available on
exchanges. Aramco’s shares are set to enter into the MSCI emerging markets index.
 Solution: - Aramco was an exciting prospect from many investors from the
beginning. Its announced in 2016, the Saudi Aramco IPO has faced several setbacks
and delays. International bankers have long warned the kingdom that a $ 2 Trillion
valuation was optimistic at best, with most putting Saudi Aramco’s valuation at $ 1.7
Trillion it entered the market last week. The Aramco Stock exchange valuation of the
IPO faced uncertainty due to low oil prices. The missiles strike against Saudi Arabia
oil industry target justly appear as strong disincentives for long term institutional
investors.

Submitted by: - Rahul goyal (M458)