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11 December 2019

Saudi government invested over $2 billion in Saudi Aramco IPO

Saudi Aramco’s offering, the world’s biggest share sale, is a key part of Crown Prince Mohammed bin Salman’s plan to wean the Kingdom’s economy off a reliance on oil.

Bloomberg/Simon Dawson

Saudi government institutions invested almost $2.3 billion into the initial public offering (IPO) of Saudi Aramco, a transaction that was intended to find new sources of funding for the Kingdom’s economic diversification plan, reported Bloomberg.

The government sold two-thirds of the shares offered in the company to institutional investors, of which 13.2 per cent came from Saudi government institutions, according to a statement from Samba Capital, one of the lead managers on the deal. Non-Saudi investors were allocated 23.1 per cent of the institutional offering, or about $3.9 billion.

The public share was originally envisaged as a way to tap global equity investors and use the proceeds to fuel the sovereign wealth fund’s investment programme. After international investors balked at Saudi Aramco’s valuation expectations, the Kingdom instead focused on raising money domestically.

Mohammed Al Jadaan, the Saudi Arabia Finance Minister said that the Public Investment Fund expects to spend a considerable amount of the proceeds from the Saudi Aramco offering in the domestic economy as it shifts focus toward high-impact local investments.

Saudi companies were the biggest investors in the offering, buying 37.5 per cent of the shares offered to institutions. Public and private funds acquired 26.3 per cent of the institutional tranche.


RELATED STORIES: Crown Prince Mohammed bin Salman Saudi Aramco IPO Public Investment Fund





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