Aramco Share Sale Sees Strong Foreign Investment Demand

Saudi Arabia has allocated more than half of an $11.2 billion share sale in Aramco (2222.SE) to foreign investors, according to two sources familiar with the matter. This strategic move is part of the kingdom’s broader initiative to attract international investment to fund various projects aimed at reducing its economic dependence on oil.

Despite ongoing efforts, foreign investment in Saudi Arabia has often fallen short of expectations. However, the response to this share sale indicates a significant shift. "We received numerous orders from the U.S., UK, Hong Kong, and Japan," one source revealed, highlighting the extensive international interest.

The demand for this secondary share sale has surpassed that of Aramco's Initial Public Offering (IPO) in 2019, which was itself a landmark event. The shares were priced at 27.25 riyals ($7.27), within a previously set range of 26.70 to 29.00 riyals. The offering, known internally as Project Bond, required months of meticulous planning by the involved banks.

The transaction has resulted in the addition of over 120 new international investors to Aramco's shareholder base, marking a significant milestone. "The overall demand for the offering exceeded $65 billion, coming from global blue-chip institutions as well as the domestic retail segment," the source added.

This share sale is a crucial component of Crown Prince Mohammed bin Salman's ambitious Vision 2030 plan. The vision aims to diversify Saudi Arabia's economy by investing in sectors such as electric vehicles and futuristic urban developments in the desert, primarily through the Public Investment Fund (PIF).

The PIF, a sovereign fund valued at $925 billion, has adjusted its focus by scaling back some of its initial mega-projects to ensure the realization of Vision 2030. The proceeds from the share sale are expected to be channeled into the PIF. Analysts and sources suggest that these funds could also be utilized to address the kingdom’s budget deficit, which has been exacerbated by recent declines in oil prices.

Saudi Arabia's strategy to court international investors underscores its commitment to economic diversification. The kingdom is determined to create a sustainable future that is less reliant on oil revenues. The strong international demand for Aramco's shares is a positive indicator of global confidence in Saudi Arabia's economic prospects and its flagship company.

As the kingdom moves forward, the success of such financial initiatives will be pivotal in funding the diverse projects outlined in Vision 2030. This plan includes significant investments in technology, infrastructure, and renewable energy, all aimed at transforming Saudi Arabia into a global economic powerhouse.

In summary, the latest share sale in Aramco has not only attracted substantial foreign investment but also reinforced the kingdom's strategic economic goals. With new international investors onboard, Saudi Arabia is well-positioned to advance its ambitious diversification agenda, paving the way for a more resilient and dynamic economy.