Saudi Arabia’s biggest IPO since Aramco surges in debut | Business and…

replaceable energy business ACWA strength International is seen as meaningful to the country’s efforts to diversify from oil.

By Bloomberg

ACWA strength International surged on its debut in Riyadh after raising more than $1.2 billion in the biggest Saudi Arabian listing since Aramco.

The stock jumped by the 30% daily limit to 72.80 riyals on Monday as investors flocked to a business seen as meaningful to Saudi Arabia’s efforts to diversify from oil. ACWA, which aims to play a major role in the change to greener energy by producing replaceable electricity and hydrogen, had offered shares at 56 riyals each.

The offering drew in more than $300 billion in orders, meaning investors’ allocations were severely limited. ACWA is now valued at $14.2 billion, making it one of the biggest listed companies in Riyadh.

“ACWA strength is an noticeable success story — it reinvented the strength sector in Saudi Arabia,” Tarek Fadlallah, the Dubai-based head of Nomura Asset Management’s Middle East unit, said in an interview with Bloomberg Television before the market opened. “The valuation is a different issue. I’m not sure it’s a cheap stock.”

The government has said ACWA will help develop 70% of Saudi replaceable energy projects. It’s part of a consortium 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 strength.

The listing comes amid a surge in Saudi stocks, with the main exchange in Riyadh up 33%. The kingdom’s economy and markets have been boosted by oil prices jumping more than 60% in 2021, thanks in large part to the global recovery from the coronavirus pandemic.

Riyadh has been the busiest Middle Eastern market for IPOs in recent years, though Abu Dhabi is catching up. In September, Saudi Telecom Co.’s internet-sets unit also surged by the maximum allowed on its trading debut after drawing $126 billion in orders for its IPO.

“The liquidity in the vicinity is very high,” Nomura’s Fadlallah said. “It’s arguable that the Saudi market is expensive. It’s certainly trading at a meaningful premium to its emerging-market peers.”

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