Saudi Aramco prices secondary offering at $7.27, raising $11.2 billion

Saudi Aramco, the world’s largest oil producer, has finalised the price for its secondary public offering at SAR 27.25 ($7.27) per share, which is at the lower end of its target range.

This pricing aims to raise $11.2 billion. The offering includes over 1.54 billion shares, representing about 0.64% of the company's issued shares, as detailed by Aramco in a statement following the book-building process. The retail portion of the offering is set at 10%, with a minimum of 10 shares each, while institutional investors will take up the remaining shares on a pro-rata basis.

The retail offering was fully subscribed, attracting over 1.33 million subscribers. Aramco anticipates that listing and trading of the shares will commence on June 9.

Last week, Saudi Arabia revealed plans to sell additional shares in Aramco, stating that this move could "increase the number of unique shareholders and enhance liquidity," as well as boost its ranking in global indexes.

“We believe Aramco is an attractive investment opportunity. Since our IPO [initial public offering], we have fulfilled our commitments, invested in unique, value-added growth opportunities, and continued to focus on profitability, resilience, and sustainability,” stated the company.

Increasing unique shareholders and market liquidity

Aramco completed the world’s largest IPO in late 2019, raising $25.6 billion and subsequently selling more shares to reach a total of $29.4 billion. The company reported a net profit drop of 14.4% to $27.3 billion in the first quarter of this year.

The Saudi government, Aramco's majority shareholder, heavily relies on the company for diversifying the kingdom's economy. As part of its Vision 2030 initiative, launched in 2016, Saudi Arabia is making significant investments in non-oil sectors such as technology and tourism to reduce dependency on oil and stimulate private sector growth.

The share price set on Friday values Aramco at approximately $1.76 trillion. Citigroup, Goldman Sachs, HSBC, JP Morgan, Merrill Lynch, Morgan Stanley, and SNB Capital are acting as joint global coordinators and bookrunners, with Al Rajhi Capital, Credit Suisse, EFG Hermes, Riyad Capital, and Saudi Fransi Capital serving as domestic joint bookrunners.

Aramco's shares closed at 28.30 riyals on Thursday, down from 33.05 riyals at the start of the year, giving it a market capitalisation of about $1.83 trillion.

Meanwhile, oil prices declined in early trading on Friday. Brent crude, the global oil benchmark, fell by 0.19% to $79.72 a barrel at 1:35 PM UAE time. West Texas Intermediate (WTI), the U.S. crude benchmark, decreased by 0.24% to $75.37 a barrel.