Saudi Aramco Share Sale Exceeds Demand Within Hours of Launch

Riyadh, Saudi Arabia — In a significant test of global investment interest, Saudi Arabia’s sale of shares in its oil giant Aramco has drawn more demand than the available stock within hours of its launch on Sunday. The sale, which could raise up to $13.1 billion, is being closely watched as an indicator of the kingdom’s appeal to foreign investors.

The banks managing the deal, including global heavyweights like Citi, Goldman Sachs, HSBC, JPMorgan, Bank of America, and Morgan Stanley, along with local firms such as Saudi National Bank and Al Rajhi Capital, will continue to accept institutional orders until Thursday. The shares will be priced the following day, with trading expected to commence on the Riyadh’s Saudi Exchange next Sunday.

Saudi Arabia is offering about 1.545 billion Aramco shares, which represents a 0.64% stake, at a price range of 26.7 to 29 riyals per share. At the upper end of this range, the offering could be valued at nearly $12 billion. According to one of the banks involved, “Books are covered on the full deal size within the price range,” indicating that demand has already surpassed the number of shares available.

The offering is seen as a crucial element of Saudi Arabia’s broader strategy to diversify its economy away from oil dependency, a goal championed by Crown Prince Mohammed bin Salman. Proceeds from the sale are expected to bolster the Public Investment Fund (PIF), which has been investing heavily in various sectors from sports to futuristic urban projects.

Aramco shares were trading down about 2% at 28.4 riyals ($7.53) as of 11:15 GMT on Sunday. The Saudi government, which currently holds just over 82% of Aramco, could reduce its stake by 0.7% if all shares are sold, with a potential increase in the offering size by an additional $1 billion.

About 10% of the new offering is reserved for retail investors, reflecting a broad strategy to engage individual investors in the kingdom’s economic transformation.

This stock offering comes at a time when the OPEC+ group of oil producers, led by Saudi Arabia and Russia, is meeting to discuss future output policy. OPEC+ is expected to maintain or deepen its current production cuts to stabilize the market amid sluggish global demand and increasing competition from U.S. producers.

Despite reduced production volumes, Aramco has continued to support its dividends, even introducing a performance-linked payout mechanism last year. Saudi Arabia currently produces around 9 million barrels of crude per day, about 75% of its maximum capacity.

The outcome of this share sale will be a critical barometer of foreign investment sentiment towards Saudi Arabia and its flagship oil company, offering insights into the kingdom’s ongoing efforts to transform its economy and reduce its dependence on oil revenues.