Saudi Aramco recently completed an $11.2 billion secondary share sale, marking a successful effort to attract international investors. The state-owned oil and gas giant first went public in 2019, but at that time, the majority of investors were domestic. The company’s valuation of $1.7 trillion fell short of the desired $2 trillion. However, with the recent sale, over half of the shares were purchased by foreign investors from the U.S., U.K., Hong Kong, and Japan, significantly surpassing the interest seen during the IPO.
The secondary share sale priced Aramco’s shares at 27.25 riyals, which was lower than the original IPO price, but still garnered significant attention from international investors. The Saudi government sold a stake of around 0.64% in Aramco, with the option to increase the sale to 0.7% using a green-shoe option. This additional sale could bring in up to $13.1 billion, providing a cash injection for the Saudi government’s Public Investment Fund (PIF) and supporting their economic diversification efforts under Vision 2030.
Despite recent declines, Aramco’s shares are still relatively expensive, with a 52-week high of 35.15 riyals and a low of 27.70 riyals. The funds raised from the share sale could help stabilize the Saudi economy, especially as oil prices remain below the level needed to balance the budget. The increase in international interest in Aramco may be seen as a positive sign for the country’s diversification plans, but there is still a long road ahead to ensure the proceeds are utilized effectively.
The successful sale attracted over 120 new international investors to Aramco’s shareholder roster, building on the momentum from the IPO in 2019, which remains the world’s largest share offering to date. The secondary offering took several months to plan and was sold out in just a few hours, demonstrating strong demand from global investors. The drive to attract international investors may have been achieved, but efforts to direct the proceeds towards industrial diversification initiatives and economic stabilization are ongoing.
Overall, the completion of the secondary share sale marks a significant milestone for Aramco and Saudi Arabia, showcasing the success in attracting international investors and potentially raising additional funds through the green-shoe option. The continued support from foreign investors signals confidence in Saudi Arabia’s economic diversification plans and the long-term vision for the country. With the funds raised, the government can now focus on utilizing the proceeds effectively to support the economy and drive sustainable growth in line with Vision 2030.
