Saudi Arabia’s plans for another multibillion-dollar offering of Aramco shares are gaining new momentum, and any deal would be one of the world’s biggest share sales in recent years, people with knowledge of the matter said. the matter
The kingdom has been working with several advisers to study the feasibility of a follow-on bid to the Riyadh exchange, according to the people, who asked not to be identified because the information is private. He could make a decision as soon as the next few weeks on whether to proceed, they said.
Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman, said in January 2021 that the government would seek to sell more shares in the state-owned oil giant in the future, with the proceeds transferred to the kingdom’s sovereign wealth fund. Aramco’s bid could take place as soon as this year if the government goes ahead, although no precise timetable has been set, the people said.
Even a 1% bid would raise more than $20 billion for the kingdom as it embarks on an ambitious investment plan to diversify its local economy. The Saudi government directly owns around 90% of Aramco, with a further 8% held by its sovereign wealth fund.
Aramco fell as much as 4.7% on Tuesday. Shares were down 2.4 percent at 2:43 p.m. in Riyadh, giving the world’s largest energy company a market value of roughly $2.1 trillion. Shares have outperformed Western oil giants such as Exxon Mobil Corp. this year.
Increase in dividends
No final decisions have been made on the exact size of the potential deal, and the kingdom could decide not to proceed if market conditions are not favorable, the people said. An Aramco representative declined to comment.
A secondary offering of Aramco shares may attract new investors after the company raised its base dividend in March and said in May it would also make more payments to shareholders from excess free cash. Aramco has come under pressure from shareholders to pay more and improve its appeal to rivals such as BP Plc and Shell Plc, which have been shelling out billions through dividends and buybacks.
The extra returns could boost payouts to Aramco shareholders, already the world’s largest, by as much as $20 billion this year, according to analyst estimates. This can help attract new global investors to participate in an offering.
List slowdown
Many had dismissed the Saudi government’s valuation expectations and Aramco’s underperformance compared to industry peers during the company’s initial public offering in 2019. Aramco raised nearly $30 billion from its IPO, the biggest ever, despite relying almost entirely on local investors.
Oil prices have fallen sharply since the middle of last year after the global economy weakened and central banks raised interest rates to fight inflation. Saudi Arabia announced a surprise cut in oil production in April along with other members of the OPEC+ alliance in a move Riyadh described as a “precautionary measure aimed at supporting the ‘oil market stability’.
Saudi Arabia, normally one of the busiest listing markets in the Gulf, has remained quiet so far this year, while other exchanges such as Abu Dhabi have stepped into the spotlight. Aramco has rejected a planned initial public offering in Riyadh of its energy trading business, Bloomberg News reported earlier this month.
