Saudi Arabia yesterday launched a secondary share sale in oil giant Saudi Arabian Oil Co (Saudi Aramco), a landmark deal that could raise up to US$13.1 billion in a major test of international appetite for the kingdom’s assets.
The banks on the deal are to take institutional orders through Thursday and price the shares the following day, with trading expected to start on Sunday on Riyadh’s Saudi Exchange.
The offering would be a gauge of Riyadh’s appeal to foreign investors, a key plank of the kingdom’s ambitious plan to overhaul its economy. Foreign direct investment has repeatedly missed its targets.
Photo: Reuters
Analysts and sources have said that the sale would also bolster efforts by the government to wean itself off its “oil addiction,” as Saudi Arabian Crown Prince Mohammad bin Salman once called it.
The sovereign wealth fund, or Public Investment Fund, the preferred vehicle driving the mammoth agenda that has poured tens of billions of US dollars into everything from sports to futuristic desert cities, is likely to be a beneficiary of the funds, they said.
Saudi Arabia is offering investors about 1.545 billion Aramco shares, at 26.7 to 29 riyals, or just under US$12 billion at the top end of the range. The banks can increase the offering by US$1 billion.
If all the shares are sold, the Saudi Arabian government would cut its stake in the world’s top oil exporter by 0.7 percent.
The world’s top investment banks are helping to manage the sale — Citigroup Inc, Goldman Sachs Group Inc, HSBC Holdings PLC, JPMorgan Chase & Co, Bank of America Corp and Morgan Stanley — along with local firms Saudi National Bank, Al Rajhi Capital Co, Riyad Capital Co and Banque Saudi Fransi.
M. Klein & Co and Moelis & Co are the independent financial advisers for the deal.
UBS Group AG’s Credit Suisse Saudi Arabia unit alongside BNP Paribas SA, Bank of China International Holdings Ltd (中銀國際) and China International Capital Corp (中國國際金融) are also helping to seek buyers for the shares, a stock exchange filing said.
About 10 percent of the new offering would be reserved for retail investors, subject to demand.
The deal kicks off as the OPEC+ was yesterday set to meet to determine output policy, with some ministers meeting in Riyadh, sources said.
OPEC+ is cutting output by a total of 5.86 million barrels per day, equal to about 5.7 percent of global demand.
Saudi Arabia produces about 9 million barrels per day of crude, roughly 75 percent of its maximum capacity.
The Saudi Arabian government directly holds just more than 82 percent of Aramco and the Public Investment Fund owns 16 percent, with the remainder held by public investors.
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