Aramco, Saudi Arabia's gigantic state oil monopoly, announced late last week that another 450 million shares had been issued, increasing its IPO by $ 3.8 billion to a total of $ 29.4 billion.
An over-allotment – also known as a "greenshoe option" – enables a company to issue a certain percentage of additional shares above the amount originally planned for an IPO. The option can act as a stabilization mechanism to prevent stocks from falling below their offer price.
The additional shares were allocated during the bookbuilding process, which means that no more shares will be offered on the market under the option, the company said. And although Aramco's share price has plunged slightly since mid-December because it never fell below its IPO price, the company will take home the additional profits from the over-allotment.
When the oil company made its historic public market debut last month, their original offer of 3 billion shares, about 1.5% of the company, brought in 32 rials ($ 8.53) at $ 25.6 billion each. The business made Aramco the most valuable listed company in the world. The following week, the shares rose 10%, despite failing to reach the $ 2 trillion valuation target set by Crown Prince Mohammed bin Salman.
The Kingdom of Saudi Arabia owns the majority of the company, and the IPO was part of bin Salman's effort to raise money to diversify the Saudi Arabian economy.
However, Saudi Aramco shares have been declining in recent weeks, among other things because investors are waiting for a possible retaliation from Iran for the US airstrike on Qasem Soleimani, the country's most powerful general.
Last Monday, the total decrease in the share was 10% from its December 16 high, reducing the company's market value by more than $ 200 billion. However, the stock price improved somewhat later in the week.