PetroRabigh IPO raises $640mn in two days

Saudi Arabia's Rabigh Refining and Petrochemical Company (PetroRabigh) said on Monday its 4.6 billion riyal ($1.23 billion) initial public offering (IPO) was 52% covered six days ahead of subscription close.

The offering raised 2.4 billion riyals from more than 1.4 million Saudi investors up to Sunday, two days after subscriptions opened, PetroRabigh said in a statement.

PetroRabigh, a $10 billion joint venture between Saudi Aramco and Japan's Sumitomo Chemicals, is selling 219 million shares, representing 25% of its capital, to Saudi nationals at 21 riyals each. Subscription closes on Saturday.

Institutional investors would be allocated between 25 and 50% of shares on offer depending on the appetite for the retail tranche, lead manager HSBC Saudi Arabia said.

This is the first time state-owned Aramco, the world's largest oil producing firm, has offered shares in one of its affiliates to the public.

The share price offers a 50% discount on the project's cost of $10 billion, according to calculations by newswire Reuters.

Sumitomo and Aramco agreed in 2005 to develop the petrochemical complex through a 50-50 joint venture that would upgrade a refinery at Rabigh on the Red Sea coast.

Aramco will supply PetroRabigh with the feedstock necessary to operate the plant on a long-term, fixed-price basis and will market the refined products produced by PetroRabigh.

Sumitomo Chemicals will provide petrochemical international sales and marketing expertise, as well as technology licensing.

The joint venture is expected to start commercial operations in the fourth quarter of 2008.

The complex will produce 18.4 million tonnes of oil products, 1.3 million tonnes of ethylene and 900,000 tonnes of propylene a year.

Sumitomo Chemicals and Aramco will each retain a 37.5% stake after the IPO.

PetroRabigh is the first of some 40 firms that plan to sell shares to the public in Saudi Arabia in 2008 in offerings worth up to $8 billion, or twice last year's total, Hasan Al-Jabri, head of the investment banking arm of state-owned National Commercial Bank (NCB) said in November. (Reuters)

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