Saudi Arabia is reportedly preparing to announce a significant secondary share offering in state-owned oil giant Aramco as soon as Thursday, pending final approval from Crown Prince Mohammed bin Salman. The share sale on the Saudi Exchange is expected to be launched on Sunday, marking the culmination of a years-long effort to sell more of one of the world’s most valuable companies after its record-setting IPO in 2019 that raised $29.4 billion.
The offering could raise around $10 billion, according to sources, as the kingdom seeks to finance its ambitious economic diversification plans and move away from its “oil addiction,” as the crown prince has described it. With the budget deficit projected to reach up to $21 billion, the sale of Aramco shares and debt issuances have become crucial for the kingdom to fund large domestic projects tied to its economic transformation agenda.
Since its IPO, Aramco has continued to be a significant cash cow for the Saudi government, with the company lifting its dividends to almost $98 billion in 2023, up from the previous $75 billion annual payout. Despite a nearly 25% drop in profits, Aramco expects an outlay of $124.3 billion this year as it invests in refineries, petrochemical projects, and expands its retail and trading businesses, with a growing focus on the gas sector.
The impending share offering is being managed by major banks, including Citi, Goldman Sachs, and HSBC, and is seen as an important step in the kingdom’s efforts to reduce its reliance on oil revenues and diversify its economy into other sectors, such as renewable energy, technology, tourism, logistics, and manufacturing.