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Saudi Aramco Launches $12 Billion Secondary Share Sale
June 2, 2024
Saudi Aramco, the world’s largest oil company by daily crude production and market capitalization, launched a substantial secondary public offering on Sunday, aiming to raise around $12 billion. This move comes as part of Saudi Aramco’s strategy to generate additional funds, following its record-breaking initial public offering in 2019, which raised $29.4 billion by selling 1.5% of the company.
The timing of this offering is critical for Saudi Arabia, which is grappling with its sixth consecutive quarterly budget deficit due to extensive spending on multitrillion-dollar megaprojects and reduced oil revenues. Despite the considerable funds anticipated from the share sale, economists caution that it will only make a small dent in the costs associated with the kingdom’s ambitious Vision 2030 plans. These plans, aimed at diversifying the economy away from oil dependency, include giga projects such as the development of entirely new cities and the necessary infrastructure, projected to cost over a trillion dollars.
The latest share sale involves 1.545 billion shares, representing an approximate stake of 0.64% in the company. The offering price is set between 26.70 ($7.12) and 29 Saudi riyals per share. At the midpoint of this range, the sale is expected to generate approximately $11.5 billion but could potentially reach up to $13.1 billion. This sale marks Aramco’s continued effort to leverage its position in the market to support the kingdom’s economic initiatives.
Aramco’s strategic financial maneuvers are not just a reflection of its corporate ambitions but also of Saudi Arabia’s broader economic agenda. The funds raised through this secondary offering are expected to support the kingdom’s extensive infrastructure and diversification projects, reinforcing its commitment to Vision 2030. As the global energy landscape continues to evolve, Aramco’s ability to adapt and capitalize on market opportunities will be crucial in sustaining its leadership position and supporting Saudi Arabia’s economic transformation.
Adding to the significance of the sale, four more banks, including Credit Suisse Saudi Arabia and BNP Paribas, have been integrated into the offering, as reported by Reuters. This diversification in banking partnerships is likely to enhance the reach and effectiveness of the share sale, attracting a broader range of investors.
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