Saudi Arabia Reportedly Prepares for $10 Billion Aramco Share Sale

Saudi Arabia is poised to make a crucial decision on Thursday regarding the sale of at least $10 billion worth of shares in its national oil company, Saudi Aramco. The potential sale aims to bolster the kingdom’s sovereign wealth fund, the Public Investment Fund (PIF).

Advisors to Saudi Aramco have been in the country for several days, finalising preparations for the secondary share offering. The ultimate decision will be made by Crown Prince Mohammed bin Salman, according to sources familiar with the matter.

The Financial Times reports that the final determination of the sale size is also expected on Thursday, with indications that the target amount could exceed $10 billion. This sale marks the culmination of a protracted plan to offload more shares in the state-owned oil giant, following its record-breaking initial public offering (IPO) in 2019. The timing of this decision aligns with OPEC’s biannual ministerial meeting scheduled for Sunday, where oil production levels for the remainder of the year will be set by the Saudi-led cartel.

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The preparations for this share sale have been marked by uncertainty, with the government previously opting out at the last minute on at least two occasions, according to one source. The decision to proceed with the sale comes amid a broader review of Saudi Arabia’s mega-projects, driven by concerns over the costs associated with its ambitious economic diversification plans. The kingdom is focused on sustaining robust non-oil growth, and any proceeds from the sale are expected to significantly benefit the PIF.

The PIF is central to Crown Prince Mohammed bin Salman’s strategy to transform the Saudi economy. It was the primary recipient of funds from Aramco’s original IPO in late 2019, which raised an initial $25.6 billion through the sale of 3 billion shares at 32 Saudi Riyals (SR) each, representing 1.5 per cent of the company. An additional 450 million shares were sold a month later, bringing the total proceeds to $29.4 billion.

On Thursday, Saudi Aramco shares closed at SR29, down approximately 25 per cent from their peak in 2022. Over recent years, the government has consistently bolstered the PIF’s resources, including a $40 billion injection from the central bank’s foreign reserves at the onset of the COVID-19 pandemic.

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In early 2023, the state transferred 4 per cent of Saudi Aramco shares to the PIF, followed by another 8 per cent in March. These transfers have increased the PIF’s assets under management and provided a steady revenue stream through Aramco’s dividends.

Last year, Saudi Aramco increased its shareholder payout to nearly $100 billion, marking the second-highest annual profit in its history. By the end of 2023, the PIF managed $925 billion in assets, with an ambitious target of reaching about $1 trillion by 2025.

The PIF declined to comment on the current share sale discussions. Saudi Aramco and the government’s media office also did not immediately respond to requests for comment.

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