Aramco secondary offering experiences robust demand, prepares to raise up to USD 13.1B
(MENAFN) The secondary offering of shares in Saudi Arabia's giant oil company, Aramco, witnessed a remarkable response, with orders surpassing the shares available for sale within hours of opening for applications on Sunday. This historic deal has the potential to raise up to USD13.1 billion. Participating banks will continue to receive requests from institutional investors until Thursday, with the share pricing set for the following day. Trading is anticipated to commence on the Saudi Stock Exchange in Riyadh next Sunday.
This offering will serve as a critical indicator of Riyadh's appeal to foreign investors and is a vital component of Saudi Arabia's ambitious strategy to diversify its economy away from oil dependency. Analysts and sources suggest that the sale will also bolster the government's efforts to reduce its reliance on oil revenues, a goal highlighted by Saudi Crown Prince Mohammed bin Salman.
Despite the positive reception of the secondary offering, Aramco shares fell approximately two percent at the close on Sunday, settling at 28.45 riyals (USD7.53). Saudi Arabia is offering around 1.545 billion shares, representing 0.64 percent of Aramco's total shares, priced between 26.7 and 29 riyals per share. If the upper price range is achieved, the total proceeds will be just under USD12 billion.
A bookrunner for the Aramco secondary offering confirmed that the demand exceeded the supply within the price range, indicating strong investor interest. There is a possibility that the banks could increase the offering by an additional billion dollars. Should all the shares be sold, the Saudi government’s stake in the world’s largest oil exporter would be reduced by 0.7 percent.
Global investment banks such as Citi, Goldman Sachs, HSBC, JP Morgan, Bank of America, and Morgan Stanley are managing the sale process, alongside local institutions including the National Bank of Saudi Arabia, Al Rajhi Capital, Riyad Capital, and Saudi Fransi. This collaboration underscores the significance and scale of the offering, which plays a pivotal role in the Kingdom's economic diversification efforts.
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