Saudi Arabia to get another Aramco stock offering

The Saudi government holds almost 90 percent shares in Aramco.

Saudi Arabia is gearing up for another multi billion dollar offering of Aramco stock which is gaining fresh momentum and the deal is expected to be one of the world’s largest share sales in recent years.

As per a Gulf News report, the kingdom has been consulting with a number of advisors to investigate the viability of a follow-on offering on the Riyadh exchange. It could settle on a choice in the next few weeks about whether to continue.

In January 2021, Saudi Arabia’s Crown Prince Mohammed bin Salman stated that the kingdom’s sovereign wealth fund would receive additional proceeds from the sale of shares in the state oil giant. The Aramco offering could happen as soon as this year if the government goes ahead with it. However, no specific date has been set.

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Reportedly, a one percent offering would give rise to more than 20 billion for the kingdom, as it has a huge investment plan to diversify the economy. The Saudi government holds almost 90 percent shares in Aramco.

Saudi Aramco is a Saudi Arabian giant oil company, the world’s largest oil producer. The company is owned and based in Dhahran, Saudi Arabia. Aramco is the most profitable company in the world, surpassing even tech giants such as Apple and Alphabet’s Google.

Dividend boost

Reportedly, there are no final decisions on the exact size of the potential deal yet, and the kingdom will proceed with the deal only if that goes in favour.

After the company increased its base dividend in March and announced in May that it would also make additional payments to shareholders from excess free cash, as a secondary offering of Aramco shares may attract new investors. Shareholders have put pressure on Aramco to raise prices and make itself more attractive in comparison to rivals like BP and Shell, which have paid out billions of dollars through dividends and buybacks.

It is anticipated that additional returns boost Aramco’s shareholder payouts, which are already the largest in the world with 20 billion this year and will help entice new global investors to invest in an offering.

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