Saudi crown prince gets his wish as state-owned energy giant Aramco’s valuation crosses US$2 trillion

Aramco shares hit 38.7 riyals on Thursday, before easing to 37.5 riyals, putting its market value at US$2 trillion

However, Bernstein analysts put Aramco’s value at around US$1.36 trillion, flagging the risk of slow net income growth if oil prices stay flat

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Officials of Saudi Aramco and Saudi stock exchange attend a ceremony to mark the debut of state-owned oil company’s IPO in Riyadh, Saudi Arabia, on Wednesday. Photo: EPA-EFE

Published: 6:58pm, 12 Dec 2019Updated: 6:58pm, 12 Dec 2019

Saudi Aramco topped the USS$2 trillion target sought by Saudi Crown Prince Mohammed bin Salman on Thursday as its shares clocked up a second day of gains, defying some scepticism about the state-owned oil firm’s long-term value.

The prince has made Aramco’s initial public offering (IPO) the centrepiece of his vision of diversifying the kingdom’s economy away from its dependence on oil by using the US$25.6 billion raised to develop other sectors.

But that is well below his plan in 2016 to raise as much as US$100 billion via a blockbuster international and domestic IPO.

Riyadh scaled back its plans after overseas investors balked at the proposed valuation and only 1.5 per cent of Saudi Arabian Oil Co (Aramco) shares were listed on the Riyadh stock exchange on Wednesday, a tiny free float for such a large company.

Investors monitor a screen displaying stock information at the Saudi stock exchange following the debut of Saudi Aramco’s IPO on Riyadh’s stock market on Wednesday. Photo: Reuters

While a 10 per cent jump in the stock on its market debut was hailed by the Saudi government as a vindication of it long-sought valuation, support was largely from loyal Saudi and Gulf investors, with some analysts saying it is worth less.