Saudi Arabia to Raise Over $11.2 bn in Aramco Share Sale

By Editor


Saudi Arabia is set to raise more than $11.2 billion by selling shares in its oil giant Aramco, after pricing the stock at the lower end of its expected range. The shares were priced at 27.25 riyals ($7.27), within a range of 26.7 to 29.0 riyals, Reuters news report said.

The offering was reportedly oversubscribed by four to five times, reflecting strong international demand. Interest from China, other parts of Asia, and Europe surpassed that of Aramco’s 2019 IPO.

Saudi Arabia has been actively seeking to attract international investment to diversify its economy away from oil. However, foreign investment has often fallen short of targets. The stronger-than-anticipated foreign demand for this share sale is a positive sign for the kingdom’s economic plans, although the exact proportion of shares purchased by international investors remains unclear.

Proceeds from the share sale are expected to be channeled into Saudi Arabia’s Public Investment Fund (PIF) to support Crown Prince Mohammed bin Salman’s Vision 2030 initiative. This plan aims to fund diverse projects, including electric vehicles and futuristic cities in the desert. The $925 billion sovereign fund, having scaled back some of its flagship “giga-projects,” is now focused on driving forward Vision 2030.

The funds raised may also help address the kingdom’s budget deficit, which has increased due to weakening oil prices. Brent crude was trading just below $80 a barrel on Friday, marking a third consecutive weekly loss. The IMF projected in April that Saudi Arabia needs oil at $96.2 a barrel to balance its budget.

Aramco’s shares were sold at nearly a 4 percent discount to their closing price on Thursday, valuing the company at about $1.76 trillion. The secondary offering, codenamed Project Bond, took months of planning and comes after the 2019 IPO, the largest share offering in history.

Despite increased dividends and a new performance-linked payout introduced last year, some international investors were deterred by Aramco’s high valuation relative to other oil majors, Saudi state control, and the company’s position amid a global shift away from hydrocarbons.

The Saudi government is selling approximately 0.64 percent of Aramco and can increase the sale to 0.7 percent through a greenshoe option, allowing banks to stabilize the price of the offering. News Desk

Latest News