Saudi Aramco’s $12 billion stock offer sells out in hours

Mohamed Shalaby - | Business

The $12 billion share offering by Saudi Aramco was fully subscribed quickly after it opened on Sunday, which is good news for the government, which is looking to raise money to support a significant economic transformation plan.

Within hours of the books opening, the government received orders for every share available, as per the terms of the agreement obtained by Bloomberg News. Books ranging in price from 26.70 to 29 riyals were included.

The order book showed a mix of domestic and foreign investors, though it was not immediately clear how much of the demand came from abroad, according to three people with knowledge of the situation who wished to remain anonymous because the information is confidential.

We'll be keenly monitoring the level of foreign involvement as a sign of interest in Saudi assets.

Foreign investors have mostly objected to the government's expectations for valuation during Aramco's 2019 IPO, leaving the government dependent on domestic purchasers. Orders totaling $106 billion were placed in response to the $29.4 billion IPO, with roughly 23% of the shares going to international bidders.

The opportunity to benefit from one of the largest payouts in the oil business is one of the latest offer's main selling points.

Investors who could overlook the company's high valuation and lack of buybacks may profit from an estimated $124 billion yearly payout, which according to Bloomberg Intelligence will give the business a 6.6 percent dividend yield.

Aramco's stock dropped as much as 2.9% to 28.30 riyals on Sunday, putting the company's valuation at roughly $1.8 trillion. Since the beginning of the year, when Bloomberg News first revealed the government's plan to sell a stake, the stock has decreased by roughly 14%, and it is presently trading at its lowest points in more than a year.

Aramco is owned by the Saudi government to the tune of around 82%, with the Kingdom's wealth fund owning the remaining 16%. Following the transaction, the Kingdom will remain the primary shareholder.

In 2021, Crown Prince Mohammed bin Salman declared that more Aramco shares would likely be sold by the government in the future. When the Kingdom started collaborating with advisors to investigate the viability of a follow-on offer, those plans acquired impetus.

Since Aramco's debut, this transaction is among the biggest share sales made worldwide.

The money raised will go toward supporting the Kingdom's efforts to diversify its economy as it ventures into new areas including sports, tourism, artificial intelligence, and projects like Neom.

Saudi Arabia is stepping up its efforts to raise money to close a budget shortfall with this offer.

The agreement was initiated by the government just hours before an OPEC+ meeting to talk about oil output policies.

Delegates said the group had the outlines of an agreement to extend supply cuts until the end of the year, which would maintain Saudi Arabia's production close to its lowest point in almost three years.

The agreement is made during a time when Saudi Arabia is experiencing high demand for fresh share sales. Four companies received orders totaling $176 billion in the last several weeks for their IPOs, attracted by fund managers who snapped at offers of nearly assured profits over the previous two years.

Regarding the sale, the government is collaborating with several banks. In addition to Moelis & Co., M. Klein & Co. acts as an independent financial adviser.

About Author

Mohamed Shalaby
Mohamed Shalaby
69 Total posts

Read Also

UAE reveals new regulations sparking concerns among cold callers

For Mohammed A, a Sri Lankan expat in Dubai, the prospect of a job wasn't just about employment; it was a chance at redemption.

UAE: Banks introduce discounted financing rates for Golden Visa holders

Banks in the United Arab Emirates are rolling out the red carpet for Golden Residency holders, offering a suite of financial products tailored to meet their unique needs and preferences.

Britain begins circulating banknotes bearing the image of King Charles

Wednesday saw the introduction of King Charles' portrait banknotes into circulation in Britain, almost two years after he succeeded the late Queen Elizabeth II.

New York Stock Exchange says glitch that showed Berkshire Hathaway down has been resolved

A technical issue that forced trading for several large equities to halt and resulted in a 99.97% decline in Berkshire Hathaway's stock price was fixed, the New York Stock Exchange announced on Monday.

Indian stocks decline amid poll expectations

Tuesday saw the biggest sell-off in Indian stocks in four years as the results of the vote counting indicated that the alliance led by Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) may not secure an overwhelming majority, as...

UAE declares significant fuel price decrease for June 2024

Recently, news of lower fuel prices starting in June 2024 from the United Arab Emirates (UAE) grabbed headlines.

Emirates Airlines announces the exclusion of Boeing 777X deliveries

Emirates Airlines, a leading global carrier, continues to navigate the dynamic aviation landscape with strategic decisions aimed at enhancing operational efficiency and customer satisfaction.

UAE announces an annual noon work ban to protect workers starting from this date

In a steadfast commitment to safeguarding worker health and well-being, the Ministry of Human Resources and Emiratization of the United Arab Emirates (UAE) has reinstated its annual noon work ban.

UAE, Qatar sign agreement to prevent double taxation

The United Arab Emirates and Qatar have recently entered into an agreement aimed at preventing double taxation and combating fiscal evasion of income taxes.

Abu Dhabi Chamber unveils UAE Digital Commerce and Innovation Growth Plans

A study showcasing the substantial expansion and promise of digital commerce in the United Arab Emirates was released by the Ministry of Economy and the Abu Dhabi Chamber.

UAE Cybersecurity unveils strategies for secure remote work

The UAE Government Cybersecurity Council is sounding the alarm on the pressing need to fortify remote work environments.

Dubai World Trade Center unveils the Work-from-Home License Initiative

Dubai World Trade Center (DWTC) has introduced commercial license packages tailored for remote work within "Expo Village," situated in the vibrant Expo City of Dubai.

UAE President announces his visit to China on this date

The UAE President, Sheikh Mohamed bin Zayed Al Nahyan, is scheduled to undertake a significant state visit to the People’s Republic of China, beginning on Thursday, May 30.

Emirates unveils a codeshare agreement with Avianca for expanded connectivity

Emirates, the esteemed Dubai-based airline renowned for its global reach, has embarked on a new venture in partnership with Avianca, a prominent Latin-American carrier.

UAE unveils the deadline date for emiratisation targets in private firms

Reminders on the deadline for enterprises with 50 or more employees to complete their Emiratization aim by June 30 were sent out by the UAE Ministry of Human Resources and Emiratization (Mohre) on Tuesday.

UAE warns against fake job ads in educational institutions

In the UAE, there has been a concerning increase in fake job advertisements on websites and social media platforms, falsely promoting employment opportunities in schools and universities.

UAE launches Blue Residency Visa to Champion Sustainability

Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister, and Ruler of Dubai, announced the initiation of a special visa, recognizing outstanding contributions to environmental sustainability.

UAE: Your Step-by-Step Guide for Residency Renewal

The General Directorate of Residency and Foreign Affairs in the United Arab Emirates (UAE) has announced adjustments to the residence and renewal fees, affecting both locals and foreign nationals residing in the country.

"Emirates Insurance" guarantees compensation for car agencies damage claims

The Emirates Insurance Federation announced that insurance companies are cooperating fully and are committed to compensating for damages sustained by car agencies according to the terms of their contracts.

Emirates Airlines announces ambitious recruitment drive for 5,000 crew members

With a reputation for quality and a commitment to giving passengers around the world outstanding service, Emirates Airlines is well-known.

UAE announces an annual noon work ban to protect workers starting from this date