After its successful and record-breaking initial public offering back in December, Saudi Arabia-based firm Aramco announced Sunday that it would be exercising its “greenshoe option” to sell an additional 450 million shares. The move will be able to raise the size of its initial public offering (IPO) to a record $29.4 billion.
Back in December, Aramco initially raised a then-record $25.6 billion in its IPO. They sold 3 billion shares at 32 riyals ($8.53) but indicated it might sell additional shares through the over-allotment of shares.
The concept of greenshoe option, or over-allocation, is an exercise of a company’s right to sell more shares in an IPO in times when demand from participants is huge enough during the initial offering. The move will see investors and participants to be allocated the additional shares for the option during the book-building process.
“No additional shares are being offered into the market today, and the stabilizing manager will not hold any shares in the company as a result of the exercise of the over-allotment option,” Aramco said in a statement.
The geopolitical situation in the Middle East has caused the stocks from Aramco to become more volatile than expected. Tensions between the United States and Iran escalated after Washington authorized the killing of a high-ranking Iranian general, Qasem Soleimani. Shares of Aramco fell to 34 riyals on Jan. 8; its lowest since the stock began trading on Dec. 11 but closed at 35 riyals on Thursday.