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Saudi Aramco is about to set two records in a single listing.

It’s now all but certain to score the biggest ever initial public share offering after setting the offer price at the top end of the range on Thursday. And, in doing so, it will almost certainly land the title as the world’s most valuable listed company, beating Apple.

Despite reservations about the price among Western investors, Saudi and Gulf institutions and individuals generated enough demand to push the IPO into historic territory. The Saudi government is floating a tiny piece of the world’s biggest oil producer.

Institutions and individual investors bid a total of $119 billion, applying for 4.65 times the 3 billion shares on offer, Aramco announced on Thursday evening, Riyadh time.

Saudi Aramco set the final IPO price Thursday at 32 riyals ($8.53), at the top of the previously announced 30-32 riyal range.

Beating Alibaba

That values the 3 billion share free float—1.5% of the total—at $25.6 billion, beating the previous world record IPO of $25 billion set by Alibaba in 2014.

If there is strong demand, underwriters have the right at any time within the first 30 days of trading to take up all or part of the over-allotment, or “greenshoe”, option granted by the Saudi government that would expand the number of shares on offer by 15%, adding billions more to the valuation.

If taken up entirely, that would raise the total value of the offer to $29.4 billion, comfortably beating the old record.

The IPO will give Saudi Aramco a market value of $1.7 trillion, surpassing Apple’s $1.16 trillion, though it falls short of the $2 trillion valuation targeted by Saudi Crown Prince Mohammed bin Salman when he first revealed his ambition to sell shares in Aramco back in 2016.

Aramco, the world’s most profitable company, will have a market value higher than that of the top five Western oil companies—ExxonMobil, Royal Dutch Shell, Chevron, Total and BP—put together.

Institutions must pay for their shares by Dec. 8 and the Riyadh stock exchange will announce later when the shares will start trading.

The OPEC trade

Saudi Aramco’s value is closely linked to the oil price and the IPO pricing coincided with reports from Vienna that Saudi Arabia, other OPEC producers and Russia are set to agree on deeper oil production cuts to support prices that have languished for the past five years.

Oil futures prices surged in anticipation of the deal, with Brent rising more than $2 a barrel to just under $63 Wednesday.

Institutions bid $106 billion for shares while individual investors in Saudi Arabia and the Gulf applied for $13 billion of shares, or about one and a half times the one billion shares set aside for them. Demand from small investors did not scale the heights of Saudi Arabia’s previous record IPO, the $6 billion flotation of National Commercial Bank in 2014, when retail investors applied for 23 times the shares on offer.

Although the flotation of Saudi Aramco will be the world’s biggest, the achievement will be bittersweet for the Saudi government. The cornerstone of Crown Prince Mohammed’s “Vision 2030” plan to modernize the Saudi economy and reduce its reliance on oil, the part-privatization of Aramco has been a long and tortuous process.

The original plan was to sell up to 5% of the company on an international exchange such as New York or London, raising $100 billion to fund the Crown Prince’s ambitious diversification plans which include a new $500 billion mega-city, but plans for an international listing were put on hold as Aramco went ahead with a smaller listing on the local Tadawul exchange. Aramco abandoned plans to market the shares outside the Gulf after big international investors balked at the high price tag that the Saudi government had put on its crown jewel.

Are Saudi investors overpaying?

A survey of 31 international asset managers released this week found that, on average, the investors valued Saudi Aramco at $1.26 trillion, which would mean Saudi authorities are over-valuing Aramco shares by around 35%. Only 13% of the asset managers surveyed by brokerage Bernstein and Procensus, an opinion-sharing platform for institutional investors, said they would buy shares in the price range set for the IPO.

Saudi Aramco has pledged to pay a dividend of at least $75 billion a year for the next five years. Based on the Saudi government’s valuation, that would mean the oil giant would trade on an initial yield of 4.5% which is significantly lower than most global oil majors, whereas the asset managers in the survey believed it should pay a higher yield than Western oil majors.

“While investors agree that Aramco has superior financial and franchise strength, weak corporate governance and limited earnings growth are reasons for the discount relative to peers,” said Bernstein, which is not advising on the IPO.

Other factors that dissuaded Western investors from putting money into the Aramco IPO included the growing backlash against fossil fuels that contribute to global warming as well as political, security and human rights concerns.

Saudi Arabia’s international reputation has suffered since journalist Jamal Khashoggi was killed at the Saudi consulate in Istanbul last year, while Aramco’s vulnerability was exposed in September by a drone attack on two of its installations that briefly knocked out half of Saudi oil production. The Yemeni Houthi group said it carried out the attack but Washington and Riyadh blamed Iran, Saudi Arabia’s regional rival. Iran denies the charge.

Mega profits

The company’s maximum oil production levels are out of the hands of Aramco management as these are set by the Saudi government in line with OPEC targets.

Aramco’s financial might is impressive. The company reported revenues of $356 billion in 2018 and a net profit of $111 billion. That’s more than the combined net income reported by Microsoft and Apple in their most recent fiscal years.

It produced 10.3 million barrels of crude oil a day in 2018, or around one in eight barrels pumped worldwide, and is sitting on 52 years of reserves.

Aramco is also set to become a big player in the global chemical industry after buying a majority stake in Saudi Basic Industries Corp, SABIC, for $69 billion this year.

Saudi Aramco traces its origins back to 1933, when Saudi Arabia granted Standard Oil Co of California, now Chevron, a concession to explore for oil in the kingdom. The first commercial discovery was made in 1938. Over the years, several other U.S. oil companies—Texaco and predecessors of Exxon and Mobil—took stakes in what became known as the Arabian American Oil Co (Aramco) before it was acquired in stages by the Saudi government.