Saudi Arabia to Raise Over $11.2 Billion from Aramco Stock Sale
Saudi Arabia is on track to raise more than $11.2 billion from its secondary public share offering in the state-controlled oil giant Aramco. The stock has been priced at the lower end of its expected range, with 1.545 billion shares set to be sold at 27.25 Saudi riyal ($7.27) apiece. This pricing decision comes amidst global oil price pressures and a transition away from hydrocarbons.
Investors typically anticipate a discounted price for new shares entering the market, as seen with Aramco’s pricing below its last settlement on the Tadāwul Saudi stock exchange. Despite this, interest in the offering remains high, with reports indicating that it was oversubscribed four to five times with strong international demand.
Aramco, a cornerstone of Riyadh’s economy, has historically attracted investors due to its significant dividend payouts. With a dividend yield of 6.81% as of June 7, the company outperforms U.S. energy giants Exxon Mobil and Chevron. The proceeds from the stock sale will provide relief to the Saudi government, supporting its Vision 2030 economic diversification program.
Vision 2030, spearheaded by Crown Prince Mohammed bin Salman, aims to reduce Saudi Arabia’s reliance on oil revenues. However, funding high-cost infrastructure projects like the Neom futuristic city comes with substantial financial commitments. The success of Aramco’s stock sale reflects investor confidence in the company’s future despite challenging market conditions.
