Saudi Aramco recently announced that international investors have purchased the majority of shares in its secondary offering, raising $11.2 billion. This move is expected to provide a financial boost to Saudi Arabia as the country embarks on large-scale projects in preparation for a post-oil future. The company revealed that the institutional tranche of the offering was mainly allocated to investors outside of the kingdom, with a significant portion going to international investors.
The secondary offering saw Aramco’s shares closing at 28.60 Saudi riyals per share, with a market capitalization of approximately $1.85 trillion. Compared to the company’s initial public offering in 2019, where only 23 percent of shares were allocated to international investors, this time around, around 58 percent of shares were offered to international investors. Orders from the European Union, the United States, Japan, Hong Kong, and Australia made up a significant portion of the demand from international investors.
Aramco announced the sale of 1.545 billion shares on the Saudi stock exchange, representing about 0.64 percent of its issued shares. The pricing was set at 27.25 Saudi riyals per share, at the lower end of the previously announced range. Retail investors were also given the opportunity to participate, with 10 percent of shares offered to them. The offering attracted 1.3 million subscribers, with retail coverage exceeding expectations.
The strong demand for Aramco’s shares indicates a positive reception from investors, with total demand from institutional and retail investors amounting to over $65 billion. It is noted that international demand for the offering was significantly higher than during the company’s IPO in 2019. The secondary offering is considered one of the largest in the EMEA region since 2000, marking a significant milestone in the equity capital market globally.
Last year, Aramco announced the introduction of performance-based dividends in addition to base dividends for its shareholders. The company’s record profits in 2022, following a surge in oil prices due to geopolitical events, have enabled it to pay out substantial dividends. Saudi Arabia remains the largest crude oil exporter globally, with the government holding an 81.5 percent stake in Aramco after the recent share sale.
The Public Investment Fund of the kingdom and its subsidiaries control about 16 percent of the company. Aramco’s financial performance and dividend payouts have attracted investor interest, reflecting confidence in the company’s future prospects. The secondary offering’s success underscores the continued appeal of Aramco as a valuable investment opportunity in the energy sector.
