Source: AFP
Oil giant Saudi Aramco said on Sunday that international investors snapped up most of the shares sold in its latest offering, which was set to raise $11.2 billion.
The secondary offering was expected to provide a short-term boost to Saudi Arabia’s finances as the Gulf kingdom builds large-scale projects, including resorts and stadiums, part of a reform drive to prepare for an eventual post-oil future.
“The majority of the shares constituting the institutional tranche of the Offer were allocated to investors located outside the Kingdom,” the company said in a statement before the Saudi stock market reopened on Sunday.
Sources close to the situation told AFP that about 58 percent of the shares were allocated to international investors, up from about 23 percent for the company’s initial public offering in 2019, which was the biggest float in history.
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The sources, who spoke on condition of anonymity to discuss private information, said about 70% of orders outside the local market came from the European Union and the United States, while others came from Japan, Hong Kong and Australia.
Aramco, the main state jewel of the Saudi economy, announced on May 30 that it will sell 1.545 billion shares, or about 0.64 percent of its outstanding shares, to the Saudi stock exchange.
It was widely seen as a test of foreign investor interest more than half of the kingdom’s campaign known as Vision 2030, whose ambitions are reflected in so-called giga-projects such as NEOM, a planned futuristic megacity in the desert.
Aramco on Friday said it would price its secondary offering at 27.25 Saudi riyals ($7.27) per share, at the low end of the range of 26.70 to 29 Saudi riyals announced on May 30.
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Aramco ended trading on Thursday at 28.30 Saudi riyals per share, giving it a market capitalization of about $1.83 trillion.
On Sunday the shares opened at 27.95 Saudi riyals and had climbed to 28.15 Saudi riyals by 0800 GMT.
Demand “stronger”
About 10 percent of the shares were offered to private investors, attracting 1.3 million subscribers, Aramco said on Friday.
A source close to the situation told AFP that retail coverage was 3.7 times and that total demand from institutional and retail investors was worth more than $65 billion.
“The whole deal would have been covered many times over by international demand. It was much stronger at this stage than at the IPO,” the source said, referring to the 2019 offering.
The source said it looks set to be the largest secondary offering in the EMEA (Europe, Middle East and Africa) region since 2000, the largest equity market transaction globally since 2021 and the largest offering in the Middle East since Aramco’s IPO , which ultimately raised $29.4 billion.
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Aramco announced last year that it would begin paying a performance-based dividend in addition to its basic dividend.
Last month the company announced first-quarter core dividend payments totaling $20.3 billion and a $10.8 billion dividend distribution to be paid in the second quarter.
“It’s no surprise that eligible traders wanted to buy shares, especially after seeing how the dividend payments have been regardless of how much money the company has made,” said Ellen Wald, a senior fellow at the Atlantic Council and author of the Aramco story. . .
Saudi Arabia is the world’s largest exporter of crude oil, and the government’s stake in Aramco is about 81.5 percent after the second share sale.
The kingdom’s sovereign wealth fund, the Public Investment Fund, and its subsidiaries control about 16%.
Aramco reported record profits in 2022 after Russia’s invasion of Ukraine sent oil prices skyrocketing, allowing Saudi Arabia to post its first budget surplus in nearly a decade.
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But the Saudi cash cow saw its profits fall by a quarter last year due to lower oil prices and production cuts.
Source: AFP