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Saudi Arabia is selling about $12 billion worth of shares in its national oil company Saudi Aramco, as the kingdom seeks further capital for its sovereign wealth fund.
The Saudi government will sell at least 1.545 billion shares, or 0.64 percent, of the world’s largest oil company at a price between SR26.7 and SR29.
The Saudi kingdom also has the option to sell up to 154.5 million additional shares at the closing price. If the option is fully exercised, it would earn the kingdom an additional $1 billion.
Amin Nasser, Saudi Aramco’s chief executive, said the timing of the sale was decided by the government, but that the offer was an opportunity for the company to expand its international investor base. He declined to name any anchor investors in the bid, saying the process would begin on June 2 and end on June 6.
“This transaction provides an opportunity for existing and new investors to build a substantial position in Saudi Aramco at a price where we believe the company offers attractive value and growth to our shareholders,” he said, adding that Aramco had paid 98 billion dollars in dividends. in 2023 and expects to pay $124 billion this year.
Aramco’s share price has fallen since the start of the year and stood at SR29 on Thursday. But Nasser denied that the secondary offering was at a discount to its successful IPO in 2019, explaining that two additional rounds of bonus shares meant Aramco investors had paid SR26.4 per IPO share.
Aramco advisers have been in Saudi Arabia making final preparations for a secondary stock offering for several days before a decision was made by Crown Prince Mohammed bin Salman, according to people familiar with the matter.
The offer represents the culmination of a multi-year plan to sell more shares in the state oil producer following its record listing in 2019. The sale also coincides with OPEC’s twice-yearly ministerial meeting on Sunday, when the cartel-led from Saudi Arabia will decide on oil production levels for the rest of the year.
Saudi Aramco’s litany of advisers have been involved in stalling preparations for a share sale for months. In at least two cases, the government decided not to move forward at the last moment, one of the people said.
The sale comes as Saudi Arabia is considering several mega-projects amid concerns about the cost of an ambitious economic diversification plan.
With the government focused on maintaining robust growth beyond the oil industry, the kingdom’s sovereign wealth fund, the Public Investment Fund, is likely to be the main beneficiary of the stake sale in the country’s top revenue generator. Nasser said the sale would not benefit Aramco’s capital spending plans.
The PIF is the main investment vehicle the crown prince is using to drive the revamp of the Saudi economy and was the main recipient of funds from the original IPO in late 2019.
In that listing, Saudi Arabia raised an initial $25.6 billion by selling 3 billion shares, equivalent to 1.5 percent of the company, with the proceeds going to PIF. A month later it sold an additional 450 million shares, raising the proceeds of the sale to $29.4 billion.
The government has steadily increased PIF funding in recent years, including $40 billion from the central bank’s foreign reserves at the start of the Covid-19 pandemic. The state then transferred a 4 percent stake in Saudi Aramco to PIF in early 2023, followed by another 8 percent last March.
The transfers helped increase the size of PIF’s assets under management and gave it a source of income through Aramco dividends. The company said on Thursday that the latest share sale would come from government shares and not PIF.
The PIF had $925 billion in assets under management at the end of 2023, with a stated goal of growing that to around $1 trillion by 2025.
