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Saudi Arabia is selling about $12 billion worth of shares in state-owned oil company Saudi Aramco as it seeks additional capital for its sovereign wealth fund.
Riyadh is offering 1.545 billion shares in the world’s largest oil exporter at a price between SR26.7 and SR29. Final pricing will be announced on June 7th.
Aramco advisers have been making final preparations for a secondary stock offering in Saudi Arabia for several days, the sources said, with a final decision on the details expected to be made by Crown Prince Mohammed bin Salman.
The offering marks the culmination of a years-long plan to sell more shares of the state-owned oil producer following a record listing in 2019. The sale also coincides with OPEC’s biannual ministerial meeting on Sunday. The Saudi-led cartel is expected to decide on oil production for the remainder of the year.
A number of Saudi Aramco’s advisors have been involved in stop-start preparations for the stock sale for several months. On at least two occasions the government decided at the last minute not to proceed further, one of the sources said.
The sale comes as Saudi Arabia is reviewing some of its largest projects amid concerns about the cost of its ambitious economic diversification plans.
With the government focused on maintaining robust non-oil growth, the Kingdom’s sovereign wealth fund, the Public Investment Fund, is likely to be a major beneficiary of the stock sale, the country’s main revenue generator.
PIF is the crown prince’s primary investment vehicle to push forward his overhaul of the Saudi economy, and was a major recipient of the funds from the initial IPO in late 2019.
In the listing, Saudi Arabia raised an initial $25.6 billion by selling 3 billion shares at SR32, equivalent to a 1.5% stake in the company, with the proceeds going to PIF. A month later, an additional 450 million shares were sold, increasing the sale proceeds to $29.4 billion.
Saudi Aramco shares closed at SR29 on Thursday, about a quarter down from their 2022 high.
The government has repeatedly increased the PIF’s funding in recent years, including securing $40 billion from the central bank’s foreign exchange reserves at the start of the Covid-19 pandemic. Afterwards, the state government transferred 4% of Saudi Aramco shares to PIF in early 2023, and then transferred an additional 8% in March.
These transfers helped PIF increase the size of the assets it managed and provided a revenue stream for PIF through dividends paid by Saudi Aramco. Last year, Saudi Aramco increased shareholder dividends to nearly $100 billion, posting the second-highest annual profit in its history.
PIF has $925 billion in assets under management as of the end of 2023, and has stated its goal to increase this to approximately $1 trillion by 2025.
