Saudi Arabia has successfully sold $11.2 billion worth of shares in Saudi Aramco, the world’s largest oil company, at a price slightly lower than expected. This move suggests that investors are still cautious about the future prospects of the company.
The sale of nearly 1.55 billion shares, representing 0.64% of the company, was priced at SR27.25 ($7.27) per share, which was a 6% discount to the closing price before the deal was announced. The government, which ran a budget deficit of $3.3 billion in the first quarter of the year, will use the funds raised to support Vision 2030, Crown Prince Mohammed bin Salman’s plan to transform the economy.
This offering was a significant attempt by Aramco to attract foreign investors, with senior executives conducting roadshows in London and New York. Despite some challenges, the company announced that the offering was fully subscribed, with institutions acquiring 90% of the shares and retail investors taking the rest.
In comparison to its 2019 IPO, which raised $25.6 billion, Aramco focused more on local investors and state funds in the Gulf due to foreign institutions’ concerns over valuation and corporate governance. However, this time around, the company highlighted its improved dividend yield to attract a broader shareholder base.
Neil Beveridge, head of equity research for Bernstein in Hong Kong, noted that Aramco’s dividend yield has increased to around 6.5% or 7%, up from 4% during the 2019 listing. This move aims to support the Saudi government’s ambitious plans by providing a significant payout to shareholders.