The company announced on Friday that after pricing the stock at the lower end of expectations, Saudi Arabia is set to raise more than $11.2 billion by selling shares in oil giant Aramco, which will help finance its spending plans.
Aramco shares were marketed at a price between 26.7 and 29 riyals, with the price of 27.25 riyals ($7.27) being close to the lower end of that range.
According to a person who knows the situation, the offering was covered four or five times.
According to the person and two other people familiar with the matter, foreign demand for the stock was higher than anticipated and exceeded that of Aramco’s historic IPO in 2019. One stated that demand came from Asia, particularly China, while another claimed that the offering attracted European interest.
According to sources and analysts, the PIF is expected to receive the proceeds from the share sale. However, given the decline in the price of oil and the expectation of increased oil supply later this year, the funds may also be used to help close the kingdom’s projected budget deficit this year.
Regarding the rationale behind the sale, Edward Al Hussainy, head of emerging market fixed income research at Columbia Threadneedle, stated, “It is not clear that oil prices will continue to go up the way they have over the last several years.”
On Friday, Brent crude was down slightly from $80 a barrel, but it was still on track to lose money for the third straight week. According to an IMF estimate from April, Saudi Arabia needs oil at $96.2 a barrel to balance its budget.
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