UPDATE: Saudi Aramco share sale exceeds initial target

Saudi Arabia’s successful Aramco share offering quickly exceeded initial targets, potentially raising up to $13.1 billion and testing international investor interest in the kingdom’s assets, Reuters reported on Sunday.

Institutional orders for the share sale will be accepted until Thursday, with pricing on Friday and trading starting next Sunday on the Saudi Exchange.

This offering is crucial for Saudi Arabia’s appeal to foreign investors and its economic diversification plan. The sale reflects the government’s efforts to reduce reliance on oil revenue, led by Crown Prince Mohammed bin Salman.

The Public Investment Fund (PIF) is expected to benefit from the funds raised, supporting Saudi Arabia’s economic transformation plans. PIF has invested in diverse sectors, including sports and futuristic megacities.

As of 11:15 GMT on Sunday, Aramco shares were trading down about two per cent at 28.4 riyals ($7.53).

One of the banks managing the deal confirmed that demand exceeded available shares, with the option to increase the offering by an additional $1 billion. If all shares are sold, the Saudi government’s stake in Aramco would decrease by 0.7 per cent.

Notably, the Saudi government holds a direct stake of just over 82 per cent in Aramco. PIF owns the remaining shares, with 12 per cent held directly and four per cent owned through subsidiary Sanabil.

The Aramco share offering coincides with a crucial OPEC+ meeting on Sunday in Riyadh. OPEC+, led by Saudi Arabia and Russia, is currently cutting production by 5.86 million barrels per day, about 5.7 per cent of global demand.

Sources suggest the group may extend these cuts into 2024 and 2025 to stabilise oil prices due to weak global demand, rising interest rates, and increased US production.