DUBAI (Reuters) - Saudi Automotive Services Co said on Wednesday it is raising 190 million riyals ($50.67 million) in debt to invest in the initial public offering of state-owned oil giant Saudi Aramco.
Saudi Automotive Services said the loan proceeds will help diversify its investments by subscribing to Aramco’s shares. SABB Bank provided the medium term financing, it said.
Saudi banks have been offering easy loans to retail investors to bid for shares in Aramco, the crown jewel of the Saudi economy and the world’s most profitable company.
Aramco plans to sell up to 1.5% of its shares in an IPO that is expected to raise up to $25.6 billion. The offer is oversubscribed, with orders from institutional investors worth more than $50 billion so far.
Some financial institutions have offered loans at four times their usual limits and others have set no ceiling on the amount clients deemed creditworthy could borrow to raise funds for the IPO, sources previously told Reuters.
Institutional buyers - which typically include asset managers, insurers or pension funds - have until 1700 Saudi time on Dec. 4 to place orders.
At the end of last week, Saudi companies accounted for 54% of the institutional book, one of the banks running the IPO said.
Reporting by Davide Barbuscia; editing by Jane Wardell