Saudi Arabia’s state-owned oil company, Saudi Aramco, sold shares to the public for the first time, raising just over $25 billion, making it the largest IPO in history. The company sold just 1.5% of the company, but valued the overall organization at $1.7 trillion.
The deal make Saudi’s IPO bigger than that of China’s online giant, Alibaba, which raised $25 billion in 2014.
Saudi Arabia relied on domestic and regional investors to by the shares after lukewarm interest from abroad, and lowered the company valuation, which was initially set well north of $2 trillion.
When it became clear that few, if any, outside the kingdom were willing to buy shares, Aramco scrapped roadshows in New York and London.
The company ended up listing the the shares on the tiny, little-used Saudi Arabian stock exchange because investors in Hong Kong, London, and New York showed little interest. Outside stockholders will hold such a small percentage of the company they won’t be able to demand transparency or change management.