Aramco’s follow-up share sale could raise up to $13.1 billion

The new offering comprises a secondary public offering of 1.545 billion shares of the company, representing 0.64 percent of the issued shares. The price range will be between SAR26.70 ($7.12) and SAR29.00 ($7.73) per share.

The offer opens for eligible investors from 9 AM KSA time on Monday, 3 June and closes at 5 PM KSA time on Wednesday, 5 June.

The new share sale could raise anywhere between $11 billion to $13.1 billion.

At the lowest end of the price band, it will raise $11 billion, and that would increase to approximately $12 billion if the price is fixed at the top end of the range.

The value could rise to $13.1 billion at the top end under a so-called greenshoe option which would allow the sale of nearly 1.7 billion shares, or a 0.7 percent stake, at the final offer price. That option allows the Stabilising Manager to cover short positions resulting from any over-allotments.

Amin Nasser, Aramco Chief Executive, commented: “The offering provides us with an opportunity to broaden the shareholder base amongst both Saudi and international investors. It also offers us an opportunity to increase liquidity and to increase our global index weighting.”

Aramco’s rising dividends

Analysts have said Aramco shares appeal to investors because of its healthy dividend yield, which stood at 6.6 percent on May 30. Comparatively, Chevron pays 4.2 percent and ExxonMobil 3.3 percent. Aramco lifted its base dividend for the fourth quarter to $20.3 billion, and boosted its performance-linked dividend to $10.8 billion.

Aramco paid $97.8 billion in dividends in 2023, up 30 percent from 2022. The full-year performance-linked dividend for 2024 is expected to be $43.1 billion.

Aramco, which briefly surpassed Apple to become the most valuable company in the world in May 2022, is the sixth largest company in the world by market value at the moment. It follows Microsoft, Apple, Nvidia, Alphabet and Amazon with a market cap of $1.872 trillion.

In December 2019, Aramco offered three billion shares to the public at a price of SAR32 per share. It was the world’s largest initial public offering (IPO) and raised $30 billion from the sale on the local Tadawul stock exchange. The IPO was 465 percent over-subscribed.

The Saudi government owns nearly 90 percent of the company, while Public Investment Fund (PIF) holds an additional 8 percent.

Aramco shares were priced at SAR32 riyals at the time of the IPO. They rose to a high of SAR38.64 riyals and closed at SAR29.00 riyals on Thursday.

First-quarter profit slide

Earlier this month, the company declared its first-quarter net profit fell 14 percent year-on-year to $27.3 billion, down from $31.9 billion for the same period last year, amid lower oil prices and production. Despite this, Aramco announced a total $31 billion dividend, to be paid in the second quarter. The world’s largest oil exporter expects to pay total dividends of $124.3 billion in 2024.

Aramco registered its second-highest-ever net income for the full year 2023 of $121.3 billion.

Morgan Stanley, Citi, Goldman Sachs, HSBC, Saudi National Bank, Bank of America and JPMorgan are acting as joint global coordinators on the deal, with local banks Al Rajhi Capital, Riyad Capital, Saudi Fransi Capital acting as joint bookrunners.