Greenshoe option, or over-allotment, allows companies to issue more shares in IPO when there is greater demand from participants in initial offer
State-owned oil company Saudi Aramco said on Sunday it had exercised its “greenshoe option” to sell an additional 450 million shares, raising the size of its initial public offering to a record $29.4 billion.
Aramco initially raised a $25.6 billion, which was itself a record level, in its December IPO by selling three billion shares at SR32 ($8.53) a share.
But it had indicated it could sell additional shares through the over-allotment of shares.
A greenshoe option, or over-allotment, allows companies to issue more shares in an IPO when there is greater demand from participants in the initial offer. Investors were allocated the additional shares during book-building, Aramco said.
“No additional shares are being offered into the market today and the stabilising manager will not hold any shares in the company as a result of exercise of the over-allotment option,” Aramco said.
Aramco shares fell to SR34 on January 8, its lowest since trading began on December 11, but closed at SR35 on Thursday.
That valued Saudi Aramco at $1.87 trillion, above the IPO price.
On Sunday, the company’s shares closed down 0.6 per cent to SR34.80.
Source ; News Agencies