Arabian Post Staff-Dubai
Saudi Arabia is reportedly considering a multi-billion dollar stock sale of energy giant Saudi Aramco as early as June. This potential sale could be one of the biggest stock offerings ever witnessed in the Middle East. Details surrounding the offering are still being finalized, but sources familiar with the matter say it could raise around $10 billion.
The offering comes as Saudi Arabia pushes forward with its ambitious economic diversification plan, Vision 2030. This initiative aims to lessen the kingdom’s reliance on oil and foster growth in non-oil sectors. While the Saudi government still holds a significant majority stake in Aramco, at roughly 90%, selling additional shares could bring in revenue to fund these economic diversification goals.
The planned share sale would be conducted on the Saudi stock exchange, the Tadawul. Unlike some past Aramco sales, this offering is expected to be a fully marketed affair, rather than a quick sale completed over a few days. This extended marketing period could allow for wider investor participation and potentially raise more capital.
The news of the potential Aramco share sale comes amid a backdrop of fluctuating oil prices. Despite reporting lower profits in the first quarter due to a decrease in oil prices and volumes sold, Aramco still expects to pay out a substantial $31 billion in dividends this year. Aramco’s share price has also experienced some volatility, rising from its initial public offering price of 32 riyals in 2019 to a high of 38. 64 riyals a year ago.
Financial experts will be closely watching how global oil markets and investor sentiment affect the potential Aramco offering. The success of the sale could hinge on Aramco’s ability to convince investors of its long-term growth potential, particularly as the world transitions towards more renewable energy sources.
Proceeds from the Aramco share sale could be used by the Saudi government to fund various initiatives outlined in Vision 2030. These initiatives include developing other industries like tourism and technology, creating new jobs for the Saudi population, and modernizing the country’s infrastructure.
If the offering goes ahead in June as planned, it would be a significant development for the Saudi economy and the global energy sector. The Aramco share sale is being closely watched by investors worldwide, and its success could have a ripple effect on the broader financial markets.
Also published on Medium.
