Saudi Aramco Considers Selling $50 Billion Stake Through Secondary Public Offering
The Wall Street Journal reported today, Friday, that Saudi Aramco is considering selling up to $50 billion of a stake through a secondary public offering on the Riyadh Stock Exchange after consulting with advisors.
Exploring Potential Investors
The report said the sale could take place before the end of the year, adding that Aramco is “exploring” potential investors, such as other multinational oil companies and sovereign wealth funds, for a deal.
Listed on Riyadh Stock Exchange
The report, citing Saudi officials and others familiar with the plan, says the Kingdom has decided to list any new Aramco offering on the Riyadh Stock Exchange to avoid the legal risks associated with an international listing.
World’s Largest Oil Company
Saudi Aramco is the world’s largest oil company with a market cap of $2.25 trillion and is up 19.6% this year.
Past IPO and Future Share Sales
At the end of 2019, the company completed the world’s largest initial public offering, raising $25.6 billion and then selling more shares, bringing the total to $29.4 billion.
The newspaper pointed out that Saudi Arabia planned up to $50 billion last year, in addition to selling Aramco shares, but market conditions decided they were not favorable.
Saudi Crown Prince Mohammed bin Salman confirmed in January 2021 that Saudi Aramco will sell more shares, with the proceeds going to support the country’s main sovereign wealth fund.
“In the coming years, there will be offers for Aramco shares, and these funds will be transferred to the State Investment Fund,” added Prince Mohammed bin Salman, speaking at the Future Investment Initiative conference in the Kingdom.
State Investment Fund and Economic Diversification
The State Investment Fund, which sometimes receives cash injections from the government, spent 120 billion rials ($32.00 billion) at the local level last year pursuing an ambitious economic program to reduce the economy’s dependence on oil by building new industries.
The fund, which manages about $700 billion in assets, suffered a total cumulative loss of 58.545 billion rials ($15.61 billion) last year, according to an annual report released last month.
Dividend Payment and Profit Decline
Also last month, Aramco announced an additional dividend of around $10 billion, most of which will go to the government as the first of several additional payments on top of a $153 billion projected core profit for 2022 and 2023.
And announced a 38% decline in second-quarter profit to 112.81 billion rials compared to the corresponding period last year.