Saudi Arabia's landmark share sale in state-owned oil giant Saudi Aramco has been finalized, with shares priced at 27. 25 riyals, which translates to roughly $7. 27 each. This marks the first secondary offering for Aramco since its record-breaking initial public offering (IPO) in 2019.
The offering, aimed at raising funds to support Crown Prince Mohammed bin Salman's ambitious plans to diversify the Saudi economy away from its dependence on oil, attracted significant interest. According to sources familiar with the deal, demand for the shares outstripped supply by a factor of 4 to 5 times at the lower end of the proposed price range. This strong investor appetite allowed the Saudi government to sell up to 0. 7% of Aramco, translating to approximately 1. 55 billion shares, and generate an estimated $11. 2 billion in revenue.
The pricing of the shares represents a slight discount of around 6% compared to Aramco's closing price before the offering was announced. This strategic move likely aimed to incentivize investor participation while ensuring a successful outcome for the government. Notably, previous sizeable share sales in the Kingdom, such as those for Saudi Telecom Company and Tadawul Group Holding, the operator of the Riyadh stock exchange, were also priced at roughly 10% discounts.
Analysts suggest that the success of the Aramco offering serves as a vote of confidence in the company's future prospects, particularly amidst a fluctuating oil market. While oil prices haven't reached the near $100 per barrel level deemed crucial by the International Monetary Fund to support the Saudi government's ambitious spending plans, Aramco's status as the world's largest oil exporter by volume continues to hold significant appeal for investors seeking exposure to the energy sector.
The offering is also expected to bolster the liquidity of the Saudi stock exchange, the Tadawul. With Aramco now boasting a larger publicly traded portion, the exchange is likely to attract a wider range of investors seeking a stake in the world's energy giant. Additionally, the influx of funds from the offering will provide the Saudi government with much-needed capital to invest in various sectors beyond oil, propelling the diversification efforts outlined in Vision 2030, the Kingdom's long-term economic development plan.
The Aramco share sale is expected to commence trading on the Tadawul next Sunday. Market participants will be closely monitoring the stock's performance in the coming weeks to gauge investor sentiment and assess the long-term impact of this landmark offering on the Saudi economy.