Saudi Aramco is looking at ways to reward retail investors who hold its stock for six months or longer after the oil company’s initial public offering (IPO).
Officials preparing the share listing of the world’s most profitable company want to ensure that the record share sale that’s expected to be valued at $2 trillion U.S. isn’t followed by a wave of selling as people book quick profits.
To incentivize small retail investors, Saudi Aramco is considering rewarding them with bonus shares if they keep their holdings for six months or longer. Executives and bankers preparing the share sale want to reduce market volatility after it begins trading as well as provide a benefit to mom-and-pop buyers.
Saudi Aramco faces a delicate balance as it seeks to push its IPO valuation to a record $2 trillion U.S. The company is planning to rely on local funds after mixed feedback from international money managers forced the company to delay its IPO from this fall to early next year (2020).
Saudi Aramco wants to ensure that its share price isn’t depressed by too many immediate sales from individual investors eyeing quick gains. It wasn’t immediately clear whether local regulators would approve the measures Saudi Aramco is proposing, or if it would be practical to offer benefits to some investors at the expense of others.
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