Investors quickly snapped up all the shares in Saudi Aramco’s latest $12 billion stock offering, signaling robust interest from both domestic and international parties. The anticipated shares were claimed in mere hours, priced between 26.70 to 29 riyals each.
Though the exact figures regarding international investors have not been made public, those with knowledge of the sale have noted a varied group of stakeholders. The high level of global participation is noteworthy, reflecting the worldwide appeal of Saudi investments. Recall that foreign investors got their hands on roughly 23% of the shares during the company’s 2019 IPO, while local buyers scooped up the rest.
The attractive dividend yield offered by Aramco is a key lure for this offering, with Bloomberg Intelligence projecting an impressive $124 billion in annual dividends, or a yield of about 6.6%. Such a promise of steady returns could alleviate any unease about the company’s market value and the lack of a share buyback program.
This offering’s timing aligns with a pivotal OPEC+ meeting where the group agreed to maintain production cuts until 2025, albeit lessening some restrictions towards the end of the year. Such measures could grant Saudi Arabia the flexibility to modify production caps for Aramco, enhancing its likely production capabilities in the future.
Even with the overwhelming success of the stock offering, Aramco’s shares dipped by 1.9% on Sunday, pegging the company’s worth near $1.8 trillion. The stock has seen a 14% decrease since the beginning of the year, a reflection of the market’s response to the government’s intent to divest part of its stake in the enterprise. As it stands, Aramco’s shares are trading at a low not seen in more than a year.
The Saudi government continues to be Aramco’s principal investor, owning about 82% of the company, while the nation’s sovereign wealth fund has a 16% interest. Crown Prince Mohammed bin Salman has hinted at plans to offload more shares of Aramco, with such intentions gaining more ground over the previous year.
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