Aramco refining unit Luberef begins trading on Tadawul after $1.32bn IPO

Company's listing is Saudi Arabia's third-largest IPO this year after Americana and Nahdi Medical

The Tadawul All Share Index, the Arab world's largest stock market, has bucked the global slowdown of initial public offerings this year. AFP

Shares of Saudi Aramco Base Oil Company, better known as Luberef, began trading on the Arab world's largest stock market after it raised $1.32 billion in its initial public offering.

The company's shares, which started trading under the ticker symbol “LUBEREF” on Saudi Arabia's Tadawul market, ended trading at 95 riyals ($25.33) on Wednesday, 4 per cent below the listing price.

The company's final offer price was set at the higher end of 99 riyals a share, implying a market capitalisation of about 16.71 billion riyals at listing.

The refining unit of oil company Saudi Aramco sold more than 50 million shares, or about 29.7 per cent of the company's issued share capital, with the IPO drawing strong demand from investors in the kingdom and internationally.

The institutional portion of the offering was 29.5 times oversubscribed, generating an institutional order book of about 146.4 billion riyals, the company said on Sunday.

Individual investors, who accounted for a quarter of the total offering, drew about $760 million in bids.

Luberef sold existing shares owned by private equity company Jadwa Investment, which held 30 per cent of the Aramco unit after acquiring the stake from Exxon Mobil in 2007.

Aramco owns the remaining 70 per cent and did not sell any of its shares in the offering.

Luberef's IPO plans come amid a bumper year for company listings in the Gulf and Mena regions, which is bucking the global slowdown in global markets, with Saudi Arabia and the UAE making up the majority of new listings on the back of high oil prices.

Middle East IPOs have raised about $21 billion this year — the highest share for the Gulf region after 2019 when Aramco went public in a $29 billion offering that was the world’s largest.

Last month, Americana, the largest quick-service restaurant operator in the Mena region, raised $1.8 billion from its IPO, paving the way for its listing on the Tadawul bourse and the Abu Dhabi Securities Exchange, the Arab world's two largest stock markets.

Americana's IPO is Saudi Arabia's largest IPO in 2022, with the company becoming the first to be dually listed in the kingdom and the UAE.

Luberef is Saudi Arabia's third-largest IPO this year after second-placed Nahdi Medical, the kingdom's biggest pharmacy chain, which raised $1.36 billion.

Established in 1976, Luberef operates two production plants on the west coast of the kingdom — in Yanbu and Jeddah — with a combined annual production capacity of 1.3 million metric tonnes of base oils, according to its website.

The Aramco unit makes base oils used in lubricants for motor vehicles, ships and industrial machinery.

Base oils are used across various sectors where hydraulic, turbine and transmission fluids are required in production and manufacturing machinery, such as in the steel industry, food production, textiles and clothing.

Luberef’s products are sold mainly in the company’s key end markets, including Saudi Arabia and other countries in the Mena region, Asia, the Americas and Europe, it said.