Saudi Aramco’s $12B stock offer sells out in hours

Saudi Aramco’s $12 billion share sale sold out shortly after the deal opened on Sunday, in a boon to the government that’s seeking funds to help pay for a massive economic transformation plan, Report informs via Bloomberg.

The government had demand for all shares on offer in a few hours after books opened, according to terms of the deal seen by Bloomberg News. Books were covered within the price range of 26.70 riyals to 29 riyals.

While it wasn’t immediately clear how much of the demand came from overseas, the order book reflected a mix of local and foreign investors, three people familiar with the matter said, declining to be identified as the information is private.

The extent of foreign participation will be closely watched as an indicator of interest in Saudi assets. During Aramco’s 2019 initial public offering, overseas investors had largely balked at valuation expectations and left the government reliant on local buyers. The $29.4 billion listing drew orders worth $106 billion, and about 23% of shares were allocated to foreign buyers.

A top selling point of the latest offer is the chance to reap one of the world’s biggest dividends. Investors who are willing to look past a steep valuation and the lack of buybacks would cash in on a $124 billion annual payout that Bloomberg Intelligence estimates will give the company a dividend yield of 6.6%.

The government kicked off the deal the same day that OPEC+ gathered to discuss oil output policy. The group agreed to extend its production cuts into 2025, while winding down some of those curbs from later this year. That would allow Saudi Arabia to relax output restrictions on Aramco.

Aramco shares fell 1.9% on Sunday, valuing the company at about $1.8 trillion. The stock has dropped about 14% since the start of this year, when Bloomberg News first reported the government’s intention to offload a stake, and is currently trading at its lowest levels in over a year.

The Saudi government owns about 82% of Aramco, while the kingdom’s wealth fund holds a further 16% stake. The kingdom will continue to be the main shareholder after the offering, which has been in the works for years.