Investors Rush to Supply “Aramco”…Demand Outstrips Supply in Hours

Saudi oil major Aramco attracted secondary sell orders of shares within hours of receiving applications on Sunday, indicating the company’s investment attractiveness and its financial strength and weighting in oil. Markets. The deal is considered historic, allowing Saudi Arabia to raise up to $13.1 billion, and represents an important test of global demand for the kingdom’s assets, Reuters reported. The period for receipt of applications for purchase of shares for both institutional subscribers and individuals will continue till Thursday.

Saudi Arabia issued 1.545 billion shares of the company’s stock, or 0.64 percent of Aramco’s stake. It was the second offering after an initial public offering in 2019 of about 1.5 percent of the company’s shares, the world’s fifth largest by market value, and raised $25.6 billion. the world

10 percent of the new offer will be reserved for individual investors.

After Sunday’s corporate subscription, an individual subscription period for Aramco shares is scheduled to begin on Monday, June 3, and the subscription price is set at a range of 26.7 to 29 riyals ($7.12 and $7.73) per share.

The Saudi government currently owns 82.19 percent of the company. Upon completion of the offer process, the government’s ownership percentage in Aramco shares will be approximately 81.55 percent if the over-allotment option is not exercised, or 81.48 percent if the over-allotment option is exercised in full. A press release issued by “Aramco” on Sunday. Individual investors subscribe to the upper limit of the price range and must specify the number of shares they want to buy at the maximum limit price, Aramco said in the statement.

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Participating banks in the process are scheduled to receive requests from institutional investors until Thursday and price the shares the next day, and the Saudi financial market is expected to start trading next Sunday.

Aramco shares fell 1.9 percent to 28.45 riyals ($7.5) on Sunday, the lowest since March 2023. Financial consultant Muhammad Al-Maimoni, during an interview with Asharq Al-Awsat, said that Aramco shares are expected to remain stable after the range from 29 to 30 riyals. He said analysts gave Aramco shares a future outlook with a target price of 33 riyals. Regarding the IPO coverage, Al-Maimoni said the full coverage of the IPO within the first hour of the start of the secondary IPO process “indicates Aramco’s investment attraction, the company’s financial strength and weight in the oil markets.”

According to Reuters, one of the bookrunners for Aramco’s secondary offering reported that the books cover the entire volume of the contract within the price range, meaning supply is outstripping supply. Banks can increase supply by billions of dollars more. The world’s biggest investment banks, Citi, Goldman Sachs, HSBC, JP Morgan, Bank of America and Morgan Stanley, are local firms such as National Bank of Saudi Arabia, Al Rajhi Capital, Riyadh Capital and Saudi Franchi. M. Klein & Company and Moelis are acting as independent financial advisors to the offering. In a disclosure to the Saudi financial market on Sunday, the Saudi “Credit Suisse” unit affiliated with the “UPS” group along with “BNP Paribas”, “Bank of China”, “International” and “China International” said. Capital Corporation” , helping to find buyers for the shares.

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