Saudi Aramco To Launch New Public Offering On June 2

The Saudi Arabian Government, in partnership with Saudi Aramco, has officially announced the initiation of a secondary public offering (SPO) of Saudi Aramco's ordinary shares. This significant financial event is set to begin on Sunday, 2 June 2024, marking a notable moment for potential investors and the stock market in the region. The deal's value could rise to $13.1 billion at the top end under a so-called greenshoe option, which would allow the sale of nearly 1.7 billion shares, or a 0.7% stake. That option allows bankers to use shares to stabilize the price of the offering.

In the main part of the deal, Saudi Arabia could raise $12 billion by offering about 1.545 billion Aramco shares, equivalent to about 0.64% of the company, if it prices the sale at the top end of a 26.7 ($7.12) to 29 riyals range, according to Aramco's filing on Riyadh's Saudi Exchange. The SPO is designed to attract a broad spectrum of investors, including institutional investors within Saudi Arabia, qualified institutional buyers globally, and eligible retail investors both within Saudi Arabia and other Gulf Cooperation Council (GCC) countries. Notably, the offering will adhere to Regulation S under the US Securities Act of 1933, as amended, for international investors.

Image Courtesy: Aramco

An important stipulation of the offering is the lock-up period; the Government and Saudi Aramco are prohibited from selling any company shares for six months post the closing date, anticipated on Tuesday, 11 June 2024, barring specific exceptions or waivers from the Joint Global Coordinators.

Saudi Aramco is scheduled to engage with institutional investors through a series of meetings from the start of the offering on 2 June until 6 June 2024. A portion of the offering, 154.5 million shares or 10%, is reserved for retail investors, contingent upon demand. Any alterations to the offering's terms, with the exclusion of retail investor share allocation, will be communicated in a timely manner.

All net proceeds from the SPO will flow to the Government, with Saudi Aramco being reimbursed for all expenses related to the offering. This ensures that there is no financial gain for Saudi Aramco from the offering and no dilution of existing shareholders' equity.

Financial Advisors and Coordinators

The offering is supported by a robust team of financial experts and institutions. M. Klein and Company along with Moelis & Company UK LLP are serving as independent financial advisors. A cohort of banks, including Citigroup Saudi Arabia, Goldman Sachs Saudi Arabia, HSBC Saudi Arabia, J.P. Morgan Saudi Arabia Company, Merrill Lynch Kingdom of Saudi Arabia, Morgan Stanley Saudi Arabia, and SNB Capital Company, are appointed as joint global coordinators and joint bookrunners.

Within the Kingdom, Al Rajhi Capital, Riyad Capital, and Saudi Fransi Capital are acting as domestic joint bookrunners. SNB Capital Company has been designated the lead manager of the offering. Additionally, several banks such as Alinma Bank, Alrajhi Banking and Investment Corporation, Arab National Bank, Banque Saudi Fransi, Riyad Bank, Saudi Awwal Bank, and Saudi National Bank have been selected as the receiving entities for this offering.

The secondary public offering of Saudi Aramco is positioned as a strategic opportunity for both the company and potential investors. With an intricate setup involving numerous financial institutions and a structured approach to engaging with investor communities, the offering is poised to be a key event in the financial calendar of 2024.