Aramco (Saudi Arabian Oil Company: 2222.SR) will likely raise as much as $11.2bn with its mega share offering to fund Saudi Arabia’s attempt to overhaul its economy.
Aramco’s $12bn Stock Sale Attracts Global Investor Attention
Based on a Bloomberg report, this would be the “biggest such deal globally in three years”. Unnamed sources indicated that the Saudi government is aiming to sell approximately 1.55 billion Aramco shares at roughly $7.27 (27.25 SR) each – constituting a 6% discount based on the stock’s closing price prior to this announcement.
Hours after the mega stock sale bulletin, the demand for all the available shares was filled, and there was notable interest from international investors. However, according to Bloomberg, it was not immediately evident which interest was local and which was foreign.
This is a shift from the company’s 2019 IPO, when the Saudi government mostly relied on local investors. Analysts commented that this shines a light on the foreign interest, especially since the oil price is currently struggling in the face of Chinese demand and supply worries.
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Some believe that Aramco’s $124bn annual dividend plays a prominent role in tweaking global investor interests. Comparatively, Aramco’s shares, which closed at 28.30 SR on Thursday 6 June 2024, are pricier than those of its Western counterparts.
Secondary offerings are not common in this region. Similar deals include Saudi Telecom Company (7010.SR) and Tadawul Group Holding, which runs the Saudi Stock Exchange. These follow-up share sales were both discounted at about 10%.
The Aramco shares sale forms part of Crown Prince Mohammed bin Salman’s ambitions to reform the country’s economy. To support this massive spending, oil must sell for approximately $100 per barrel, according to the International Monetary Fund.
