Saudi Aramco’s largest initial public offering since its listing, business and economic news

Renewable energy company ACWA Power International is seen as the key to the country’s efforts to achieve oil diversification.

ACWA Power International soared after its debut in Riyadh, raising more than US$1.2 billion in the largest Saudi Arabian listing since Aramco.

On Monday, the stock rose 30% to 72.80 riyals, as investors flocked to what is considered a key business in Saudi Arabia’s efforts to diversify its oil. ACWA aims to play an important role in the transition to green energy by producing renewable electricity and hydrogen, issuing shares at a price of 56 riyals per share.

The issuance attracted more than 300 billion U.S. dollars in orders, which means that the distribution of investors is severely restricted. ACWA is now valued at 14.2 billion U.S. dollars, making it one of the largest listed companies in Riyadh.

“ACWA Power is an outstanding success story-it has reshaped the power industry in Saudi Arabia,” Tarek Fadlallah, head of Nomura Asset Management’s Middle East division in Dubai, said in an interview with Bloomberg TV before the market opened. “Valuation is a different issue. I’m not sure this is a cheap stock.”

The government has stated that ACWA will help develop 70% of Saudi Arabia’s renewable energy projects. It is part of a consortium that is developing a $5 billion plant that will export green hydrogen from the new city of Neom. The fuel will be made using solar and wind energy.

The listing came as Saudi stocks soared, and Riyadh’s main exchange rose 33%. Oil prices will rise by more than 60% in 2021, which has largely contributed to the global recovery from the coronavirus pandemic, thus boosting Saudi Arabia’s economy and market.

In recent years, Riyadh has been the busiest IPO market in the Middle East, although Abu Dhabi is catching up. In September, the Internet service department of Saudi Telecom also soared to the highest level allowed for the first transaction after receiving a $126 billion IPO order.

“The liquidity in the area is very high,” said Fadellala of Nomura Securities. “The high price in the Saudi market is controversial. Its transaction price is definitely higher than its peers in emerging markets.”