Saudi Arabia's Landmark $11.2B Aramco Offering Set to Shake Markets

Saudi Arabia is set to raise over $11.2 billion from Aramco's secondary share offering, pricing shares at 27.25 riyals. This deal aims to fund Crown Prince Mohammed bin Salman's economic diversification plan. The offering, which may increase to $12.36 billion, follows the world's largest IPO and is crucial for attracting global investors.

Reuters | Updated: 07-06-2024 11:37 IST | Created: 07-06-2024 11:37 IST
Saudi Arabia's Landmark $11.2B Aramco Offering Set to Shake Markets
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Saudi Arabia is poised to raise more than $11.2 billion from its secondary offering of oil giant Aramco's shares, after pricing them towards the lower end of a price range at 27.25 riyals ($7.27), people familiar with the matter told Reuters on Friday. Aramco's book was covered four to five times near the bottom of the price range of 26.7 to 29 riyals, one of the people said.

The pricing is a nearly 4% discount to where Aramco's shares closed on Thursday and gives Aramco a valuation of about $1.76 trillion. Its market capitalisation, according to its Thursday share price, was about $1.83 trillion. The Saudi government is selling a roughly 0.64% stake in Aramco in a landmark deal that could help fund Crown Prince Mohammed bin Salman's plan to diversify the economy.

The offering could then be boosted to 0.7% of the oil giant in a so-called greenshoe option, which allows bankers to use shares to stabilise the price of the offering. If that option is exercised, Aramco would raise roughly $12.36 billion. The world's top oil exporter exercised a greenshoe option after its 2019 initial public offering (IPO) to raise $29.4 billion, which remains the world's largest IPO.

The banks on the deal took orders through Thursday and shares are set to start trading next Sunday on Riyadh's Saudi Exchange. The offering is codenamed Project Bond and has been in the works for months as a key step in drawing a broader range of investors after Aramco's record-breaking IPO, sources have said.

The deal will be a test of interest in Saudi markets after lukewarm demand from international investors for that IPO amid concerns about a high valuation, Saudi government control and the energy transition away from hydrocarbons. ($1 = 3.7504 riyals)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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