Saudi Arabia starts landmark Aramco share sale to raise $13bn


Dubai — Saudi Arabia began a secondary share sale in oil giant Aramco on Sunday, a landmark deal that could raise up to $13.1bn in a test of international appetite for the kingdom’s assets.

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

The offering will be a gauge of Riyadh’s appeal to foreign investors, a key plank of the kingdom’s ambitious plan to overhaul 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, analysts and sources have said.

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 morning to 28.25 riyals ($7.53).

Saudi Arabia is offering investors about 1.545-billion Aramco shares, at 26.7 to 29 riyals, or just under $12bn at the top end of the range. The banks can increase the offering by a further $1bn. 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.

M Klein and Co and Moelis are independent financial advisers for the deal. UBS Group’s Credit Suisse Saudi Arabia unit alongside BNP Paribas, Bank of China International and China International Capital Corporation are also helping to seek buyers for the shares, according to a stock exchange filing.

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

Reuters





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