Aramco’s $10bn secondary offering set for Sunday, says report

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Saudi Arabia is reportedly preparing to formally launch a secondary offering of shares in Aramco as soon as Sunday. This comes nearly five years after the energy colossus raised $29.4bn from an initial public offering on the local exchange.

The deal has garnered informal interest from investors in the Middle East and Europe, totalling over $10bn, according to a Bloomberg report. Sources familiar with the matter stated that the kingdom plans to conduct a book-building process to take orders until next Thursday.

The share offering is expected to be priced at a further discount of as much as 10 per cent to the trading price, though that could narrow based on investor demand.

Bloomberg said that is in line with secondary sales in stc Group and Tadawul Group Holding, which operates the kingdom’s stock exchange.

Saudi Arabia has picked several banks including Citigroup, Goldman Sachs Group and HSBC Holdings for the deal.

Local financial institutions including Saudi National Bank are expected to participate in the secondary offering while Moelis & Company has been acting as an adviser to help pick underwriters.

Proceeds from the share sale will help fund big initiatives tied to the kingdom’s economic transformation strategy under Vision 2030.

Aramco dividends

Aramco bolstered dividends to almost $98bn in 2023 from the $75bn it had been paying annually, despite profit having dropped by nearly a quarter. The company expects an outlay of $124.3bn this year.

The state energy giant introduced a special performance-based dividend in 2023, providing cash to the government and helping to lure new investors, according to a Reuters report. It offered $31bn in dividends for the first quarter, a 59 per cent boost from the first three months of 2023.

Aramco reported a 14 per cent decline in first-quarter net income to $27.3bn in the three months to March 31, in line with analyst estimates and down from $31.9bn a year earlier, hit by lower oil prices and volumes sold.

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