Saudi Arabia to sell $12bn worth of Saudi Aramco shares

Saudi Arabia is selling roughly $12bn worth of shares in its national oil company Saudi Aramco, as the kingdom seeks further capital for its sovereign wealth fund.

The Saudi government will sell at least 1.545bn shares, or 0.64 per cent, of the world’s largest oil company at a price between SR26.7 and SR29.

The Saudi kingdom also has the option to sell up to an additional 154.5mn shares at the final price. If the option is exercised in full, it would net the kingdom an additional $1bn.

Amin Nasser, chief executive of Saudi Aramco, said the timing of the sale had been decided by the government, but that the offering was an opportunity for the company to broaden its international investor base. He declined to name any anchor investors in the offering, saying the process would begin on June 2 and end on June 6.

“This transaction provides an opportunity for current and new investors to build a sizeable position in Saudi Aramco at a price where we believe the company offers attractive value and growth to our shareholders,” he said, adding that Saudi Aramco had paid out $98bn in dividends in 2023 and expected to pay out $124bn this year.

Aramco’s share price has fallen since the start of the year and stood at SR29 on Thursday. But Nasser denied that the secondary offer was priced at a discount to its blockbuster IPO in 2019, explaining that an additional two rounds of bonus shares meant that Saudi Aramco investors had paid SR26.4 per IPO share.

Advisers to Saudi Aramco have been in Saudi Arabia making the last preparations for a secondary share offering for several days, before a decision was taken by Crown Prince Mohammed bin Salman, according to people familiar with the matter.

The offering represents the culmination of a years-long plan to sell more shares in the state-owned oil producer after its record-setting listing in 2019. The sale also coincides with Opec’s twice-yearly ministerial meeting, which takes place on Sunday, when the Saudi-led cartel will decide on oil production levels for the rest of the year.

Saudi Aramco’s advisers have been involved in stop-start preparations for a share sale for months. On at least two occasions the government has decided not to go ahead at the final moment, one of the people said.

The sale comes as Saudi Arabia is reviewing some mega-projects amid concerns about the cost of an ambitious economic diversification plan.

With the government focused on maintaining robust growth beyond the oil industry, the kingdom’s sovereign wealth fund, the Public Investment Fund, is likely to be the main beneficiary of a sale of shares in the country’s chief revenue generator. Nasser said the sale would not benefit Aramco’s capital spending plans.

The PIF is the main investment vehicle that the crown prince is using to drive the overhaul of the Saudi economy and it was the main recipient of funds from the original IPO in late 2019.

In that listing, Saudi Arabia raised an initial $25.6bn by selling 3bn shares, equivalent to 1.5 per cent of the company, with the proceeds going to the PIF. A month later it sold an additional 450mn shares, lifting the proceeds of the sale to $29.4bn.

The government has repeatedly boosted the PIF’s funds in recent years, including with $40bn from the central bank’s foreign reserves at the onset of the Covid-19 pandemic. The state then transferred 4 per cent of Saudi Aramco shares to the PIF in early 2023, followed by another 8 per cent last March.

The transfers helped boost the size of PIF’s assets under management and provided it with a source of revenue through Saudi Aramco dividends. The company said on Thursday that the latest share sale would come from the government’s shareholding rather than the PIF’s.

The PIF had $925bn in assets under management at the end of 2023, with a stated goal of increasing that to about $1tn by 2025.