WionDrive News Desk 
Saudi Arabia and its banking partners will commence taking orders on Sunday morning for up to $13.1 billion worth of shares in the state-owned energy giant Saudi Aramco. This significant offering serves as a major test of international investor interest in the Saudi market.
In a long-awaited announcement on Thursday, the kingdom and Aramco unveiled plans to sell up to a 0.7% stake in the state-controlled oil company, with 10 per cent of the offering reserved for retail investors, subject to demand. The order book will remain open until June 6, and the deal will be priced on June 7.
Codenamed “Project Bond,” the offering has been in the works for months as a key step in diversifying Aramco’s investor base since its record-breaking initial public offering (IPO) in 2019. It also holds potential to further fuel Saudi Arabia’s massive economic diversification program.
The deal marks a test of interest in Saudi markets after tepid demand from international investors during the 2019 IPO, amid concerns over high valuation, government control, and the energy transition away from hydrocarbons.
International investors have similarly been hesitant about the kingdom’s mega-projects, ranging from beach resorts to new cities.
Investors buying into Aramco will need to weigh environmental concerns against the company’s substantial dividends. As Tellimer’s head of equity research, Hasnain Malik, stated, “Since the IPO, higher expectations on dividend payout and oil price have outweighed lower expectations on output. That improvement in the cash flow available for shareholders may not be enough to entice those foreign investors that did not participate in the IPO because of environmental concern on fossil fuels or governance concern on the priorities of the dominant sovereign shareholder.”
When asked about potential interest from anchor investors to acquire a significant portion of the offering, Aramco’s Chief Financial Officer Ziad Al-Murshed remained tight-lipped, noting that the shares are being offered above the IPO price within a range of 26.7 riyals ($7.12) to 29 riyals. Aramco’s shares closed at 29.1 riyals on Thursday, valuing the company at $1.87 trillion, compared to the $1.7 trillion IPO valuation.
The sale comes as global stock offerings have reached $247.4 billion so far this year, the highest level since 2021, according to Dealogic data. It will be one of the biggest share sales in the last decade.
Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman, has invested hundreds of billions of dollars through the kingdom’s sovereign Public Investment Fund (PIF) into massive projects across various sectors, including electric vehicles, sports, and a new airline, to diversify the economy away from hydrocarbons and create jobs.
According to Jim Krane, a research fellow at Rice University’s Baker Institute in Houston, “Selling Aramco shares is not the only way to fund (MbS’) Vision 2030, but it’s one of the easier options now that it’s clear foreign investors aren’t interested in buying stakes in Saudi gigaprojects.” He expects most buyers of the offering to be Saudi investors, describing it as “an indirect form of self-funding by Saudi investors who receive shares of Saudi Aramco instead of a piece of Neom or the New Murabba,” referring to two of the PIF’s mammoth projects.
The kingdom is supported by a familiar team of advisers from the Aramco IPO, including Wall Street dealmaker Michael Klein’s firm Klein & Co and U.S. boutique firm Moelis & Co acting as independent advisers. Saudi National Bank’s investment banking arm SNB Capital is the lead manager, alongside global coordinators Morgan Stanley, Citi, Goldman Sachs, HSBC, Bank of America, and JPMorgan.
Aramco’s CEO Amin Nasser described the sale as an opportunity for current and new investors to build a substantial position in the company, and for Aramco to broaden its shareholder base and boost the liquidity of its shares.
