Saudi Arabia has initiated the sale of approximately $12 billion worth of shares in its national oil company, Saudi Aramco, as part of an ongoing effort to bolster its sovereign wealth fund, the Public Investment Fund (PIF). According to filings on Riyadh’s Saudi Exchange, the Kingdom will sell at least 1.545 billion shares, representing 0.64% of the world’s largest oil company, at a price range of SAR 26.7 to SAR 29 per share.
The Saudi government also has the option to sell up to an additional 154.5 million shares at the final price, potentially raising an extra $1 billion if the option is fully exercised. This could bring the total proceeds from the sale to $13.1 billion.
Amin Nasser, CEO of Saudi Aramco, stated that the timing of the sale was determined by the government. He emphasised that this transaction is an opportunity to broaden Aramco’s international investor base, offering attractive value and growth prospects to shareholders. The sale process will commence on June 2 and conclude on June 6. Nasser noted that Aramco paid $98 billion in dividends in 2023 and expects to pay out $124 billion this year.
Aramco’s share price has declined since the beginning of the year, standing at SAR 29 as of Thursday. However, Nasser refuted claims that the secondary offer is priced at a discount compared to the 2019 IPO, explaining that previous rounds of bonus shares effectively adjusted the IPO share price to SAR 26.4.
According to the Financial Times, the decision to proceed with this share offering coincides with the upcoming OPEC ministerial meeting, where oil production levels for the rest of the year will be decided.
The proceeds from the sale are expected to significantly benefit the PIF, which is the primary investment vehicle for Crown Prince Mohammed bin Salman’s economic diversification plan, aimed at reducing the Kingdom’s dependency on oil. The sale will not impact Aramco’s capital spending plans but will provide the PIF with additional funds to support various mega-projects.
The PIF, which had $925 billion in assets under management at the end of 2023, aims to increase its assets to about $1 trillion by 2025. Recent boosts to the PIF’s funds include $40 billion from the central bank’s foreign reserves at the onset of the pandemic and the transfer of a combined 12% of Aramco shares to the PIF in early 2023.
The upcoming share sale represents the culmination of a years-long plan to sell more shares in Aramco following its record-setting IPO in 2019, which raised $29.4 billion.