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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 the option to sell up to an additional 154.5 million shares at the closing price. If the option is exercised in full, it will 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 the offering was an opportunity for the company to expand its international investor base. He declined to name the main investors in the offering, saying the process will start 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 where we believe the company offers attractive value and growth to our shareholders,” he said, adding that Aramco paid out $98 billion in dividends during 2023 and expects to pay out $124 billion this year.
Aramco’s share price has fallen since the start of the year, reaching SR29 on Thursday. But Nasser denied that the secondary offer was at a discount to its blockbuster IPO in 2019, explaining that an additional two rounds of bonus shares meant Aramco investors paid SR26.4 per IPO share.
Aramco advisers have been in Saudi Arabia making final preparations for a secondary stock offering for several days ahead of a decision by Crown Prince Mohammed bin Salman, according to people familiar with the matter.
The offering represents the culmination of a long-standing plan to sell more shares in the state oil producer following its record listing in 2019. The sale also coincides with OPEC’s biannual ministerial meeting on Sunday, when the Saudi-led cartel will decide on oil production levels for the rest of the year.
Saudi Aramco’s multiple advisers have been involved in preparations for the share sale for months. In at least two cases, the government decided not to proceed at the last minute, one of the people said.
The sale comes as Saudi Arabia reviews some megaprojects amid concerns about the cost of an ambitious economic diversification plan.
As the government focuses on maintaining steady growth outside the oil industry, the kingdom’s sovereign wealth fund, the Public Investment Fund, is likely to be the main beneficiary of the sale of shares 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 the crown prince is using to drive reform of the Saudi economy and was the main recipient of funds from the initial 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 the PIF. A month later, it sold an additional 450 million shares, raising proceeds from the sale to $29.4 billion.
The government has repeatedly boosted PIF funds in recent years, including by $40 billion from the central bank’s foreign reserves at the start of the Covid-19 pandemic. The state then transferred 4% of Saudi Aramco’s shares to the PIF in early 2023, followed by another 8% last March.
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’s stake, not the PIF.
The PIF had $925 billion in assets under management at the end of 2023, with a stated goal of increasing this to around $1 trillion by 2025.