Saudi Aramco successfully completed its $11.2 billion secondary share sale, attracting significant interest from international investors. In 2019, the company’s initial public offering was mainly supported by domestic investors, resulting in a valuation of $1.7 trillion, below the $2 trillion target. However, the recent secondary share sale saw over half of the shares placed with foreign investors from the U.S., U.K., Hong Kong, and Japan, indicating a successful courting of international interest.
The secondary share sale saw Aramco pricing its shares at 27.25 riyals ($7.25), which was in the bottom half of the initial price range set by the company. This sale price was around 15% below the IPO price, but Saudi officials were pleased with the level of international participation in the offering. Over 120 new international investors were added to Aramco’s shareholder roster, surpassing the international interest seen in the 2019 IPO, which remains the largest share offering ever.
The Saudi government sold a 0.64% stake in Aramco during the secondary sale, with the option to increase the sale to 0.7% through a green-shoe option. This could raise proceeds from $11.2 billion to the $12.36 – $13.1 billion range. The cash injection from the sale is expected to benefit Saudi Arabia’s Public Investment Fund (PIF) and support the country’s Vision 2030 diversification plan led by Crown Prince Mohammed bin Salman.
Despite recent declines in Aramco’s share price, the company’s shares are still considered expensive, with a 52-week high of 35.15 riyals per share and a low of 27.70 riyals. The international interest in the company is seen as a vote of confidence in Saudi Arabia’s diversification plans, although the country’s budget still relies on oil prices above $90 per barrel. Some of the proceeds from the share sale may be directed towards stabilizing the Saudi economy and supporting industrial diversification initiatives.
Overall, while the mission of attracting international investors has been successful, the focus now shifts towards utilizing the proceeds from the sale to support economic diversification and stabilize the Saudi economy. The increased international interest in Aramco is seen as a positive sign for Saudi Arabia’s long-term growth plans, and the country may use the funds to further its Vision 2030 objectives. However, with oil prices remaining a key factor in the Saudi budget, careful planning and strategic investment of the funds will be crucial for the country’s economic stability and development.
