In a strategic move to attract global investors, Saudi Aramco has launched a worldwide roadshow to promote its $12 billion share sale, marking a departure from its previous IPO approach.
What Happened: Saudi Aramco is actively engaging with international investors through events in London and the US to promote its $12 billion share sale, a significant shift from its 2019 IPO strategy, Bloomberg reported on Monday.
The oil behemoth’s CEO, Amin Nasser, and CFO, Ziad Al Murshed, are participating in the London roadshow, with a U.S. event also planned. The share sale, which began on Sunday, will accept orders from institutional investors until June 6. The offering was swiftly covered within hours of opening, attracting both local and foreign investors, though the exact breakdown of international participation remains undisclosed.
The level of foreign investment is under scrutiny, especially considering the tepid response from international buyers during the company’s 2019 IPO. That offering, initially projected to include international roadshows, was eventually limited to local investors, who committed to the bulk of the $106 billion in orders, with foreign buyers accounting for about 23%.
Why It Matters: This share sale presents an opportunity for investors to access one of the highest dividend yields in the world, with Bloomberg Intelligence estimating a 6.6% return from the company’s $124 billion annual payout. The Saudi government and its Public Investment Fund, which own 82% and 16% of Aramco respectively, will maintain their majority stakes post-offering, contributing to Saudi Arabia’s broader efforts to alleviate its budget deficit.
Nasser has recently highlighted the challenges in the global energy transition, emphasizing the ongoing demand for oil and gas. At the CERAWeek by S&P Global energy conference, Nasser urged a more realistic approach to the future of energy, suggesting that the current strategy is not meeting expectations.
Furthermore, the kingdom’s ambitious development projects, including a $500 billion city and a $48 billion property development, have put a strain on Saudi Arabia’s finances. These initiatives have depleted the sovereign wealth fund’s cash reserves, leading to unprecedented borrowing and the contemplation of selling additional shares in Saudi Aramco.
Photo by Piotr Swat on Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
