5/30/2024–|Last updated: 5/30/202401:55 PM (Mecca time)
Saudi Arabia is preparing to officially launch a secondary offering of shares of the giant oil company Aramco on Sunday, in a deal that could raise more than $10 billion, making it among the largest of its kind in recent years, according to Bloomberg.
This economic agency quoted unnamed informed sources as saying that the government plans to conduct a process of building an order book to receive orders until next Thursday, and they said that the deal has attracted informal interest from investors in the Middle East and Europe with a total value of more than 10 billion dollars.
Pricing
The sources suggested that the offer will be priced at an additional discount of up to 10% of the trading price, although this margin may shrink based on investor demand. This is consistent with the secondary offerings of Saudi Telecom Company “STC” (STC) and the Tadawul Holding Group, which manages the stock market. Finance in the Kingdom.
No final decisions have been made regarding the offering period, according to the sources, who indicated that the parameters of the deal, including its size, may change.
The offering is scheduled to come days after Aramco’s stock fell to its lowest level in more than a year, and the start of the deal procedures will coincide with the OPEC Plus meeting on Sunday to discuss oil production policy, as most market observers expect the group to maintain supply restrictions, which could To keep Saudi production near its lowest level in about 3 years.
Bloomberg reported earlier that the Kingdom is preparing a list of banks, including Citigroup, Goldman Sachs, and HSBC Holding, to complete the deal, and informed sources suggested that local companies, including the National Bank of Saudi Arabia, will participate, while the… Moelis & Co is a financial advisor to assist in the selection of underwriters.
The next offering comes nearly 5 years after Saudi Arabia raised about $30 billion in Aramco’s initial public offering, which was the world’s largest stock sale ever.
Economic transformation
Proceeds from the sale of shares help finance the large initiatives associated with this economic transformation, and Crown Prince Mohammed bin Salman’s plans include a push towards artificial intelligence, sports and tourism, in addition to projects such as the development of the $1.5 trillion city of NEOM, according to Bloomberg.
The deal comes at a critical time for the Kingdom, which owns an 82% stake in the $1.9 trillion company, as crude oil prices are below the levels the government needs to balance its budget, and Saudi Arabia has fallen short of its goal of attracting more than 100 billion. Dollars annually in foreign direct investment.
The government needs a price close to $100 per barrel to pay for its spending plans, according to the International Monetary Fund. But the price of Brent crude, currently around $85, is expected to approach $79 in 2025, and $75 the following year, according to estimates compiled by Bloomberg.
Aramco’s oil production is also restricted by the OPEC+ policy as Saudi Arabia, the group’s de facto leader, tries to revive the market and boost prices. The company already has significant untapped production capacity, and the government ordered earlier this year to halt further expansion of its capacity.
