Global oil giant Aramco (2222) has offered 1.545 billion shares on the Saudi Stock Exchange “Tadawul,” representing 0.64% of the company’s shares.
This marks the “second secondary offering” in the region this year, highlighting the activity of these “rare offerings” in the Arab markets.
Details
The company’s capital now is 90 billion riyals, divided into 242 billion shares (without nominal value per share).
The price range for the “additional share” offering of the world’s largest oil company is between 26.7 riyals and 29 riyals per share.
This means the offering could raise approximately 45 billion riyals ($12 billion) if priced at the maximum.
So What
The book-building process for subscribing institutions started on Sunday and will continue until next Thursday.
A total of 1.3905 billion shares have been allocated for this category, equivalent to 90% of the offering shares.
The individual subscription period will be from June 3 to 5, with 154.5 million shares allocated for them.
According to the offering terms, “Aramco” may sell about 1.7 billion shares through the “over-allotment option.”
This could increase the transaction value to $13.1 billion at the maximum price range.
This option allows bankers to use the shares to stabilize the offering price.
It is worth noting that the company resorted to the “over-allotment option” after its initial public offering in late 2019, which remains the largest in the world.
Some Context
The offered share is “among the largest stock sales” globally since the Kingdom listed the company on the stock exchange.
Investors had long anticipated this step as “Aramco” seeks to expand its shareholder base locally and internationally.
Additionally, it aims to bring in cash flow to support the Saudi economy diversification program.
The “new offering” follows the 2019 IPO of about 1.5% of the company’s shares, which is “the fifth largest company in the world” by market value.
Now What
The state will receive the entire net proceeds from the offering, compensating “Aramco” for all expenses.
Thus, there will be no reduction in the percentage of shares owned by other shareholders in the company.
On the other hand, investors are expected to benefit from annual dividends of $124 billion.
Most of these dividends will go to the Saudi government, the largest shareholder in “Aramco.”
