Saudi Arabia is set to divest approximately $12 billion worth of shares in Saudi Aramco, the national oil company, to bolster its sovereign wealth fund.
The government plans to sell a minimum of 1.545 billion shares, representing 0.64% of the world’s largest oil company, priced between SR26.7 and SR29 per share.
Additionally, there is an option to sell up to 154.5 million more shares at the closing price, potentially generating an extra $1 billion if fully exercised.
Amin Nasser, CEO of Saudi Aramco, noted that while the timing was determined by the government, the sale offers a chance to broaden the company’s international investor base. He declined to specify any anchor investors, indicating the process would run from June 2 to June 6.
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Nasser emphasized the transaction as an opportunity for investors to acquire a significant stake in Aramco at an attractive value, highlighting that the company paid $98 billion in dividends in 2023 and anticipates $124 billion in 2024.
Despite a decline in Aramco’s share price to SR29 since the start of the year, Nasser dismissed claims of a discount relative to its 2019 IPO, citing two rounds of bonus shares that valued IPO shares at SR26.4.
Advisors have been finalizing the offering preparations in Saudi Arabia, with the decision ultimately made by Crown Prince Mohammed bin Salman. This move is part of a long-term strategy to sell more shares post the historic 2019 listing. The timing coincides with the OPEC ministerial meeting on oil production levels for the year.
The sale aligns with Saudi Arabia’s focus on major projects amid an ambitious economic diversification agenda. The Public Investment Fund (PIF), the kingdom’s sovereign wealth fund, is expected to be the primary beneficiary, rather than Aramco’s capital expenditures.
The PIF, pivotal to Crown Prince Mohammed bin Salman’s economic overhaul, initially benefited from the 2019 IPO, which raised $29.4 billion from the sale of 3 billion shares. In subsequent years, the government has boosted PIF’s funds, including a $40 billion injection from the central bank during the pandemic and transferring significant Aramco stakes.
With PIF managing $925 billion in assets by the end of 2023, its target is to expand this to approximately $1 trillion by 2025. The upcoming share sale will involve government-held shares, not those of the PIF.