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Oil giant Saudi Aramco said on Sunday that international investors have snapped up most of the shares sold in its latest offering, which is expected to raise $11.2 billion.
The secondary offering is expected to provide a short-term boost to Saudi Arabia’s finances as it builds mega-projects including resorts and stadiums, part of a reform push by the Gulf kingdom to prepare for an eventual post-oil era.
“The majority of the shares in the institutional portion of the offering were allocated to non-Saudi investors,” the company said in a statement before the Saudi stock exchange reopened on Sunday.
About 58% of the shares were allocated to international investors, up from about 23% in the company’s 2019 initial public offering, the largest listing in history, people familiar with the matter told AFP.
The source, who asked not to be named, said about 70% of orders outside the local market came from the European Union and the United States, with the rest coming from Japan, Hong Kong and Australia.
Saudi Aramco, a major player in the Saudi economy made up of state-owned enterprises, announced on May 30 that it would sell 1.545 billion shares on the Saudi Stock Exchange, representing about 0.64% of its issued shares.
The move is widely seen as a test of foreign investor appetite as Saudi Arabia is halfway through its Vision 2030 plan, whose ambitious goals are reflected in so-called megaprojects such as NEOM, a futuristic megacity planned for the desert.
Saudi Aramco said on Friday it priced its secondary offering at 27.25 Saudi riyals ($7.27) per share, at the lower end of a range of 26.70 to 29 Saudi riyals announced on May 30.
Saudi Aramco closed at 28.30 Saudi riyals per share on Thursday, with a market value of about $1.83 trillion.
The stock opened at 27.95 Saudi riyals on Sunday and had climbed to 28.15 Saudi riyals by 08:00 GMT.
– Demand ‘stronger’ –
Saudi Aramco said on Friday that about 10% of the shares were offered to retail investors, attracting 1.3 million subscribers.
A source familiar with the matter told AFP that retail coverage was 3.7 times, with total demand from institutional and retail investors exceeding $65 billion.
“International demand for the entire deal will cover it many times over. It’s much stronger now than it was at the IPO,” the source said of the 2019 offering.
Sources said this appears to be the largest secondary offering in the EMEA (Europe, Middle East and Africa) region since 2000, the largest equity capital markets transaction globally since 2021, and the largest offering in the Middle East since the Aramco IPO, ultimately raising $29.4 billion.
Saudi Aramco announced last year that it would start paying performance-based dividends in addition to its base dividend.
Last month, the company announced a base dividend totaling $20.3 billion in the first quarter and will pay a performance-linked dividend of $10.8 billion in the second quarter.
“It’s not surprising that qualified traders would want to buy the stock, especially after seeing the dividends being paid regardless of how much money the company makes,” said Ellen Wald, a senior fellow at the Atlantic Council and author of a history of Saudi Aramco.
Saudi Arabia is the world’s largest crude oil exporter. After the second equity sale, the Saudi government holds approximately 81.5% of Saudi Aramco’s shares.
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, and its subsidiaries control about 16 percent.
Aramco reported record profits for 2022 after Russia’s invasion of Ukraine sent oil prices soaring, giving Saudi Arabia its first budget surplus in nearly a decade.
But profits from Saudi Arabia’s cash cow fell by a quarter last year due to lower oil prices and production cuts.
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