Saudi Aramco, the kingdom’s oil giant, has made a groundbreaking announcement with its $11.2 billion share offering. This marks the largest global offering in three years, capturing the attention of investors worldwide. The government plans to sell nearly 1.55 billion shares at a discounted price of $7.27 each, representing a 6% reduction from the stock’s last closing price.
Foreign investors have shown immense interest in this deal, as demand surged within hours of the books opening on Sunday. Currently, the Saudi government owns approximately 82% of Aramco, while the Public Investment Fund holds an additional 16% stake. This stock sale signifies a significant departure from Aramco’s 2019 IPO, which had limited global investor participation. However, the current share offering has managed to attract substantial attention from foreign investors, despite the challenges faced by the oil market.
One of the key attractions for investors is Aramco’s impressive annual $124 billion dividend, the largest globally. Despite the company’s higher share price compared to Western oil majors, the offering has generated significant interest. The Saudi government aims to sell shares in its state oil giant to finance Crown Prince Mohammed bin Salman’s ambitious economic transformation plans. These plans rely on oil prices remaining near $100 a barrel, a level not seen since late 2022. After the offering, the government will continue to be the primary shareholder, maintaining its 82% ownership of Aramco.
SNB Capital, along with Citigroup Inc., Goldman Sachs Group Inc., HSBC Holdings plc, JPMorgan Chase & Co., Bank of America Corp., and Morgan Stanley, serves as the joint global coordinator for the share sale. M. Klein & Co. and Moelis & Co. are independent financial advisers on the offering.
Despite the recent decline in oil prices, the significant interest generated by the offering reflects confidence in Aramco’s long-term prospects.
