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Saudi Arabia is selling roughly $12 billion worth of shares in its national oil company, Saudi Aramco, as the kingdom seeks additional 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 Kingdom of Saudi Arabia also has the option to sell up to 154.5 million shares at the closing price. If the option were exercised in full, it would mean an additional $1 billion for the kingdom.
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 offering, saying the process will begin on June 2 and end on June 6.
“This transaction provides an opportunity for existing and new investors to build a significant 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 out $98 billion in dividends. in 2023 and expects to pay out $124 billion this year.
Aramco’s share price has fallen since the start of the year and remained at 29 SR on Thursday. However, Nasser denied that the secondary offering was priced at a discount to its blockbuster IPO in 2019, explaining that two more rounds of bonus shares meant Aramco investors paid SR26.4 per IPO share.
Aramco’s advisers spent days in Saudi Arabia preparing for a secondary stock offering before Crown Prince Mohammed bin Salman made the decision, according to people familiar with the matter.
The offer is the culmination of a years-long plan to sell more shares in the state oil producer after its record high in 2019. The sale also coincides with OPEC’s twice-yearly ministerial meeting on Sunday, when the Saudi-led cartel will decide on oil production levels for the rest of the year .
A litany of Saudi Aramco advisers have been involved for months in preparations to halt and begin the share sale. In at least two cases, the government decided not to proceed at the last minute, one of the people said.
The sale comes as Saudi Arabia is reviewing some megaprojects amid concerns over the cost of an ambitious economic diversification plan.
As the government focuses on maintaining strong growth outside the oil industry, the kingdom’s sovereign wealth fund, a public investment fund, is likely to be the main beneficiary of the sale of shares in the country’s main revenue generator. Nasser said the sale would not benefit Aramco’s capital spending plans.
The PIF is the main investment vehicle used by the crown prince to transform 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 the PIF. A month later, it sold another 450 million shares, raising the sale proceeds to $29.4 billion.
The government has repeatedly increased PIF funds in recent years, including $40 billion from the central bank’s foreign exchange reserves at the start of the Covid-19 pandemic. The state then transferred 4 percent of Saudi Aramco shares to PIF in early 2023, followed by another 8 percent last March.
The transfers helped increase the size of the PIF’s assets under management and provided it with a source of income through Aramco dividends. The company said on Thursday that the latest share sale would come from the government stake rather than the PIF.
The PIF had $925 billion in assets under management at the end of 2023, with a stated goal of increasing this to around $1 billion by 2025.