Foreign investors flock to Aramco shares

About 60 per cent of the shares offered in Saudi Aramco’s $11.2 billion stock sale reportedly went to foreign investors, a notable shift from the predominantly local participation seen in its 2019 listing, Bloomberg reported on Sunday.

Sources familiar with the matter told Bloomberg, there was a significant interest from the US and Europe, with additional support coming from funds in the UK, Hong Kong, and Japan. Orders totalling over $65 billion were recorded for the share sale.

During its previous listing, overseas investors had been hesitant due to valuation concerns, leaving the government reliant on local buyers. However, this time around, the secondary offering attracted a broad range of investors, with more than 125 new international investors participating.

Aramco’s shares initially dipped by as much as 1.4 per cent in Riyadh on the first day of trading after the secondary offering before rebounding and rising approximately 2 per cent.

The firm confirmed that a majority of shares were allocated to foreign funds, with international institutional investors now holding about 0.73 per cent of the company.

Investors were drawn to Aramco’s substantial dividend, which Bloomberg Intelligence estimates to be one of the world’s largest, offering a yield of 6.6 per cent. Despite lower-than-expected pricing towards the bottom end of the proposed range, demand was robust, with bids covering all shares within hours after the offer opened.

The Saudi government, which retains about 82 per cent ownership of Aramco, is set to receive at least $11.2 billion in proceeds from the offering, excluding over-allotments, to support its economic transformation initiatives.

Foreign participation in the offering was closely monitored, with Aramco’s executives conducting events in London and the US to stimulate demand. Following the offering, the Saudi government will remain the primary shareholder, with the Public Investment Fund holding a further 16 per cent stake.