Saudi Arabia’s Aramco is planning to sell additional shares worth up to $50 bn, as reported by the Wall Street Journal. Aramco will likely list the shares on the Riyadh Stock Exchange. After extensive consultations with advisors, Saudi arrived at such a decision to mitigate risks associated with an international listing.
With a market cap of about $1.7 tn, Aramco is the world’s most valuable oil company.
If this plan by Saudi to sell more Aramco shares pulls through, the company will once again hold the record for the largest offering in the history of capital markets. In 2019, its initial public offering (IPO) on the Tadawul, the Saudi stock exchange, amounted to $29.4 bn. It was the largest offering at that time.
Ant Group’s $34 billion IPO surpassed this record in 2020. Ant Group is an open Internet platform affiliated with China’s Alibaba Group.
Aramco’s 2019 listing represented a downsized version of the company’s initial goal of selling a five-percent stake. Back then, their objective was to raise as much as $100 bn through a major international exchange. The eventual IPO only saw 1.5 percent of Aramco shares offered to the public.
The company is yet to make a final decision on the timing of the second round of its offering. However, insiders suggest that it could introduce the shares before the end of 2023 on the Riyadh bourse. Prospective investors include multinational oil companies and other countries’ public investment funds.
From oil to other industries
Earlier in May, Bloomberg said that Saudi Arabia was contemplating listing more shares.
Saudi’s bid to sell Aramco shares is part of Crown Prince Mohammed bin Salman’s strategy to capitalize on the country’s massive oil assets. Once monetized, the funds will be directed as investments in non-oil sectors.
In the same month, Aramco also announced its intention to offer an additional dividend linked to its annual financial performance. This move aimed to address shareholder pressure for increased dividends and diversify the company’s investor base.
Aramco reached a record-shattering annual profit of $161 bn in 2022. This figure is the largest profit by an energy company. However, it reported a substantial 38 percent decline in quarterly profits in August. This drop is attributable to diminished energy prices and production cuts.
Nevertheless, the company remarkably raised its dividend by over 50 percent. The Saudi government is the company’s majority shareholder.
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