Saudi Aramco, the oil giant, recently announced the successful completion of its secondary share sale, bringing in a total of $11.2 billion and attracting interest from new foreign investors. This sale marks the largest offering in the Middle East since Aramco’s initial public offering (IPO) back in 2019. The company stated that this achievement will help diversify and broaden Aramco’s shareholder base, with significant participation from both international and local investors. This move is expected to further enhance the liquidity of Aramco’s shares and support Saudi Arabia’s financial goals amidst ongoing economic reforms.
Aramco’s chief executive, Amin Nasser, expressed his satisfaction with the outcome of the transaction, emphasizing the importance of welcoming new investors into the company. The decision to sell 1.545 billion shares, representing about 0.64 percent of its total issued shares, on the Saudi stock exchange was part of a strategic move to gauge foreign investor interest. This initiative comes as Saudi Arabia continues to progress with its Vision 2030 plan, which includes ambitious projects like NEOM, a futuristic megacity project in the desert.
According to sources close to the situation, approximately 58 percent of the shares were allocated to international investors, a significant increase from the 23 percent allocated during the IPO in 2019. The total proceeds from the sale could reach $12.35 billion if Merrill Lynch Kingdom of Saudi Arabia, the stabilizing manager, exercises an over-allotment or “greenshoe” option to sell additional shares by July 9th.
Following the share sale, the Saudi government’s stake in Aramco now stands at around 81.5 percent, with the Public Investment Fund and its subsidiaries holding approximately 16 percent of the company. Despite facing challenges such as fluctuating oil prices and production cuts, Aramco reported record profits in 2022, driven by a surge in oil prices following Russia’s invasion of Ukraine. This economic boost allowed Saudi Arabia to achieve its first budget surplus in nearly ten years.
Overall, the successful completion of the share sale reflects the strong investor confidence in Aramco and Saudi Arabia’s economy. The influx of new investors and the financial gains from this transaction are expected to further strengthen Aramco’s position as a key player in the global oil market and support the kingdom’s long-term economic vision.
