Saudi Arabia is preparing to launch a second public offering of shares in state oil giant Saudi Aramco, according to a new report. The Saudi administration could initiate the multibillion-dollar offering before the end of this year, marking another significant step in the kingdom’s economic diversification plans.
The potential share sale would follow Aramco’s record-breaking initial public offering (IPO) in December 2019, which raised $29.4 billion and valued the company at $1.7 trillion. That offering, which took place on the Saudi stock exchange (Tadawul), was the world’s largest IPO at the time.
Strategic Timing and Market Conditions
The timing of this second offering appears strategic, as global oil prices have stabilized after the volatility of recent years. Saudi officials are reportedly confident that market conditions will support a substantial valuation for the world’s largest oil producer.
Financial analysts suggest the administration is moving forward with the offering now to capitalize on Aramco’s strong financial performance. The company reported a net income of $161.1 billion for 2022, one of the highest annual profits ever recorded by any company globally.
“The Saudi government sees this as an opportune moment to proceed with another public offering,” said an energy market analyst familiar with the matter. “Oil demand remains strong despite the energy transition, and Aramco continues to generate substantial cash flow.”
Part of Broader Economic Vision
The planned share offering aligns with Saudi Arabia’s Vision 2030 program, which aims to reduce the kingdom’s dependence on oil revenues and diversify its economy. Crown Prince Mohammed bin Salman has championed this initiative since its launch in 2016.
Proceeds from the new offering could fund:
- Infrastructure development projects throughout the kingdom
- Investments in non-oil sectors including tourism and entertainment
- Technology initiatives and renewable energy projects
The Saudi Public Investment Fund (PIF), which receives much of the proceeds from Aramco’s dividends and share sales, has been investing aggressively in various sectors globally, from technology startups to sports franchises.
Potential Size and Structure
While specific details about the size of the offering remain undisclosed, sources indicate it could raise several billion dollars. The Saudi government currently owns approximately 98% of Aramco shares, giving it considerable flexibility in determining the size of the new offering.
The structure of the offering is still being finalized, but options under consideration include:
“The administration is weighing whether to list additional shares on the Tadawul or pursue a secondary listing on an international exchange,” said a financial advisor with knowledge of the discussions. “They’re also considering whether to issue new shares or sell existing government-owned shares.”
International exchanges including New York, London, Hong Kong, and Singapore have reportedly expressed interest in hosting Aramco shares, which would increase the company’s global investor base.
Market Impact and Investor Interest
The announcement has already generated significant interest among global investors. Aramco’s consistent dividend payments and strong financial performance make it an attractive option for income-focused investors, particularly in the current economic climate.
Institutional investors from Asia, particularly China and Japan, are expected to show strong interest in the offering, continuing a trend seen in the 2019 IPO.
However, some environmental, social, and governance (ESG) focused investors may remain hesitant due to concerns about fossil fuel investments and climate change impacts.
The Saudi administration and Aramco executives have not yet made official statements regarding the reported offering. Financial advisors and underwriters for the potential deal have not been publicly announced, though several global investment banks are likely competing for roles in what would be one of the year’s largest financial transactions.
