Saudi Arabia raises $12.35 billion from sale of additional Aramco shares

Saudi Arabia raised USD 12.35 billion (nearly CZK 290 billion) from a secondary sale of shares in oil giant Aramco. That is USD 1 billion more than the country had initially expected. Foreign news agencies reported the figure, citing a government announcement today.

In June, Saudi Arabia sold 1.545 billion shares at a price of 27.25 riyals (CZK 170.6) each, representing 0.64 percent of the company’s shares. During the stabilisation period, however, the deal manager, Merrill Lynch, could buy back and return 154 million shares to the state if the share price fell below the offer price. The 30-day stabilisation period has now ended, and no stabilisation transactions took place.

The secondary share offering was much smaller than the primary offering, from which the country raised USD 30 billion in 2019. The company’s initial public offering (IPO) was therefore the largest in the world. The secondary offering is, however, an important source of revenue for the government. The government increased borrowing this year and expects budget deficits at least through 2026. It is embarking on a massive spending plan aimed at creating jobs, developing entirely new cities and launching new industries.

Aramco also wants to raise at least USD 3 billion through its first bond sale in three years. This would further increase Saudi Arabia’s debt, Bloomberg reported.

Aramco pays the world’s largest dividend. The dividends the company pays to its shareholders are worth more than the combined total of the next eight largest dividends paid by other companies.

Saudi Arabia, together with state-controlled entities, holds a total stake of about 98 percent in Aramco. The company is valued at around USD 1.8 trillion. Oil prices are currently below the level the government needs to balance its budget, and the country is also falling short of its target of attracting more than USD 100 billion in foreign direct investment annually.

Aramco’s output is constrained by restrictions agreed under OPEC+, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia. Saudi Arabia, the de facto leader of the OPEC cartel, is therefore trying to revive the market and raise prices. As a result, Aramco has significant unused production capacity, and the government ordered the company early this year to halt any further capacity expansion.