June 22, 2024
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Investors Rush For Aramco Share Sale That Could Raise $13 billion

Saudi Aramco‘s share sale has attracted more demand than the stock on offer within hours of kick-off on Sunday. A landmark deal that could raise up to $13.1 billion in a major test of international appetite for the kingdom’s assets.

The banks on the deal will take institutional orders through Thursday and will price the shares the following day, with trading expected to start next Sunday on Riyadh’s Saudi Exchange.

The deal will serve as a measure of Riyadh’s appeal for investors and also a means to achieve its ambitious plan to revamp its economy. Foreign direct investment has repeatedly missed its targets.

The sale will also bolster efforts by the government to wean itself off its “oil addiction”, as Saudi de facto ruler Crown Prince Mohammed bin Salman once called it aa gathered by Reuters, citinganalysts and sources.

The sovereign wealth fund, the Public Investment Fund (PIF), the preferred vehicle driving the mammoth agenda that has poured tens of billions of dollars into everything from sports to futuristic desert cities, is likely to be a beneficiary of the funds, they said.

Aramco’s shares were down 2.6% on Sunday to 28.25 riyals ($7.53) as of 0825 GMT.

Saudi Arabia is offering investors about 1.545 billion Aramco shares, or 0.64%, at 26.7 to 29 riyals, or just under $12 billion at the top end of the range.

“Books are covered on the full deal size within the price range,” meaning indicated demand exceeded deal size, one of the banks on the deal said,.

The banks can increase the offering by a further roughly $1 billion. If all the shares are sold, the Saudi government will be cutting its stake in the world’s top oil exporter by 0.7%.

The world’s top investment banks are helping to manage the sale – Citi, Goldman Sachs, HSBC, JPMorgan, Bank of America and Morgan Stanley – along with local firms Saudi National Bank, Al Rajhi Capital, Riyad Capital and Saudi Fransi.

About 10% of the new offering will be reserved for retail investors, subject to demand.

The deal kicks off at a time when the OPEC+ group of oil producers is set to meet on Sunday to determine output policy, with some ministers meeting in Riyadh, according to OPEC+ sources.

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