Saudi Arabia and its bankers will start taking orders on Sunday for as much as $13.1 billion worth of shares in its energy giant Aramco, in a major test of international investor interest in the kingdom’s markets. The offering, codenamed “Project Bond,” is seen as a key step in diversifying Aramco’s investor base since its record-breaking initial public offering (IPO) in 2019.
The sale, which will offer up to 0.7% of Aramco, with 10% reserved for retail investors, marks a test of interest in Saudi markets after lukewarm interest from international investors in the 2019 flotation. Concerns about Aramco’s high valuation, Saudi government control, and the energy transition away from hydrocarbons have made some investors wary.
Investors buying into Aramco will need to weigh environmental concerns against its rich payouts. “Since the IPO, higher expectations on dividend payout and oil price have outweighed lower expectations on output,” said Hasnain Malik, head of equity research at Dubai-based Tellimer. However, the improvement in cash flow available for shareholders may not be enough to entice those foreign investors that did not participate in the IPO due to environmental or governance concerns.
The sale comes as stock offerings globally have reached $247.4 billion in the year to date, the highest level since 2021, according to Dealogic data. It will be one of the biggest share sales in the last decade and a crucial test of international appetite for Saudi assets.