Saudi Arabia is selling about $12 billion worth of shares in its national oil company, Saudi Aramco, as the kingdom seeks additional capital for its sovereign wealth fund.
The Saudi government will sell at least 1.545 billion shares, or 0.64 percent, of the world’s largest oil company at a price between SR26.7 and SR29.
The Saudi kingdom also has an option to sell up to an additional 154.5 million shares at the final price. If the option is exercised in full, it would bring the kingdom an additional $1 billion.
Amin Nasser, Saudi Aramco’s chief executive, said the timing of the sale was decided by the government, but that the offer was an opportunity for the company to expand its base of international investors. He declined to name any lead investors in the bid, saying the process would begin on June 2 and end on June 6.
“This transaction provides an opportunity for existing and new investors to build a significant position in Saudi Aramco at a price we believe the company offers attractive value and growth to our shareholders,” he said, adding that Aramco paid $98 billion in dividends. 2023 and expects to pay out $124 billion this year.
The Aramco share price has fallen since the beginning of the year and was SR 29 on Thursday. But Nasser denied that the price of the secondary offering was lower than its successful IPO share in 2019, explaining that the additional two rounds of bonus shares meant that Aramco investors paid SR26.4 per IPO share.
Aramco advisers were in Saudi Arabia making final preparations for the secondary stock offering several days before the decision was made by Crown Prince Mohammed bin Salman, according to people familiar with the matter.
The offer is the culmination of a multi-year plan to sell more stakes in the state-owned oil producer following its record listing in 2019. The sale also coincides with the biannual Opec ministerial meeting on Sunday, when the Saudi-led cartel will decide on oil production levels for the rest of the year.
A litany of Saudi Aramco advisers have been engaged in stop-start preparations for the share sale for months. On at least two occasions, the government decided not to proceed at the last minute, one of the people said.
The sale comes as Saudi Arabia is reconsidering some mega-projects amid concerns over the cost of an ambitious economic diversification plan.
With the government focused on maintaining strong growth outside the oil industry, the kingdom’s sovereign wealth fund, the Public Investment Fund, is likely to be the main gainer from the sale of stakes in the country’s main revenue generator. Nasser said the sale would not benefit Aramco’s capital spending plans.
The PIF is the main investment vehicle used by the crown prince to spur an overhaul of the Saudi economy and was the main recipient of funds from the original IPO in late 2019.
In that listing, Saudi Arabia raised an initial $25.6 billion by selling 3 billion shares, equivalent to 1.5 percent of the company, with the proceeds going to PIF. A month later, he sold an additional 450 million shares, raising the proceeds from the sale to $29.4 billion.
The government has repeatedly increased PIF funding in recent years, including $40 billion from the central bank’s foreign exchange reserves at the start of the Covid-19 pandemic. The state then transferred 4 percent of Saudi Aramco shares to the PIF in early 2023, followed by another 8 percent in March last year.
The transfers helped increase the size of PIF’s assets under management and provided it with a source of income through Aramco dividends. The company said on Thursday that the latest share sale will come from the government stake, not the PIF.
PIF had $925 billion in assets under management at the end of 2023, with the stated goal of increasing those assets to around $1 trillion by 2025.
