Aramco’s Secondary Offering: Billion Raised, Despite Oil Price Pressures

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Saudi Aramco’s Secondary Share Offering: Insights and Analysis

Aramco’s Lucrative Offer

Image: Aramco's logo displayed on a smartphone screen.

Saudi Arabia is set to boost its coffers by over .2 billion through its secondary public offering of Aramco shares. The pricing of the shares fell within the lower range of expectations, enticing investors with a reasonable entry point.

Strategic Pricing

The 1.545 billion shares were priced at 27.25 Saudi riyal (.27) apiece, slightly below the prior trading value on the Tadāwul exchange. This strategic pricing reflects the typical discount when new shares enter the market, increasing the supply available for trading.

Uncertain Oil Market, Unwavering Interest

Fluctuations in global oil prices and ongoing energy transition have not dampened interest in Aramco’s offering. Sources indicate that the demand for shares exceeded supply four to five times, showcasing stronger international participation compared to the company’s record-breaking IPO in 2019.

Dividend Appeal

Significant dividend payouts have always been a key attraction for Aramco investors. As of June 7, the yield stood at 6.81%, far exceeding that of energy giants Exxon Mobil (3.33%) and Chevron (4.18%).

Government’s Stake and Use of Funds

The Saudi government, with an 82% stake, and the Public Investment Fund (PIF), holding 16%, remain Aramco’s largest shareholders. The proceeds from the share sale will boost the government’s finances, supporting its ambitious Vision 2030 program.

Vision 2030: Diversifying Saudi Arabia

Vision 2030 aims to reduce Saudi Arabia’s dependence on oil revenue. However, the program demands substantial investment. The futuristic city of Neom alone is estimated to cost approximately 0 billion.

Data sourced from: cnbc.com