Markets

Aramco targets $50bn in IPO on local bourse

By Pramod Kumar

September 4, 2023, 9:05 AM

Investors will be able to trade the constituent stocks of the Saudi stock market directly in the Hong Kong market

Sale to happen before end of year
Aramco worth $2.2trn
Oil giant complete world’s largest IPO in 2019

Saudi Aramco is planning to sell a stake valued at $50 billion through a secondary share offering on the Saudi stock exchange, according to a media report.

The sale is likely to happen before the end of the year after consultations with an adviser, the Wall Street Journal reported, citing Saudi officials.

Aramco has been “sounding out” potential investors, such as other multinational oil companies and sovereign wealth funds, about participating in the deal.

The Saudi Exchange (Tadawul) listing will help avoid legal risks associated with an international listing.

Aramco, the world’s biggest oil company, has a market value of $2.2 trillion after its shares rose nearly 20 percent this year.

The oil giant completed the world’s largest IPO in late 2019, collecting almost $26 billion. The company later sold more shares to raise the total to more than $29 billion.

Crown Prince Mohammed bin Salman said in 2021 that Saudi Aramco was in talks to sell more shares and the proceeds would be used to bolster the kingdom’s sovereign Public Investment Fund (PIF).

“There will be Aramco share offerings coming in the coming years, and this cash will be transferred to the PIF,” Prince Mohammed said at the Future Investment Initiative conference.

Saudi Aramco was planning to float its energy trading arm Aramco Trading Company (ATC), but in May 2023 the deal was postponed until next year, Bloomberg reported.

Aramco reported a 38 percent year-on-year fall in profit to SAR112.81 billion ($30 billion) in the second quarter of 2023. Last month, the company announced an additional $10 billion dividend.

Despite the drop in income, Aramco president and CEO Amin H Nasser hailed the company’s “resilience and ability to adapt through market cycles”.

“Our mid to long-term view remains unchanged,” Nasser said.

“With a recovery anticipated in the broader global economy, along with increased activity in the aviation sector, ongoing investments in energy projects will be necessary to safeguard energy security.”

Riyadh has extended its voluntary oil output cut of 1 million barrels per day for a third month to include September. The move is expected be extended beyond that or deepened.

The kingdom raised September prices for most of its crude to Asia after announcing the extended production cut, Reuters reported.