Saudi Aramco's USD 12.4bn SPO confirms strong foreign interest in landmark achievement

By Velizar Velikov, Head of M&A Database at EMIS

In mid-July, Saudi Aramco exercised a greenshoe option, securing an additional USD 1bn in its secondary initial public offering (IPO), raising the total to a remarkable USD 12.35bn. The Saudi Arabian government executed the over-allotment of 154.5 million shares, bringing the overall size of the offering to 0.7% of the company’s issued shares. Previously, it sold 0.64% of the issued shares at a price of 27.25 riyals (USD 7.27) per share, at the lower end of the anticipated range.

Reports indicate that the offering was met with overwhelming demand, covered four to five times over. International interest surpassed that of Aramco's landmark initial public offering in 2019, with approximately 70% of orders from outside the local market coming from the European Union and the United States, along with additional interest from Japan, Hong Kong, and Australia. Notably, around 58% of shares were allocated to international investors, a significant increase from approximately 23% during the company's IPO.

Aramco’s SPO is the largest in the Europe, Middle East, and Africa (EMEA) region since 2000 and the second biggest ever in emerging markets, following the USD 70bn share sale by Brazil's state-run oil producer Petrobras in 2010. It was the most significant equity capital market transaction globally since 2021, and the largest offering in the Middle East since Aramco's IPO, which ultimately raised USD 29.4bn. 

Prior to the SPO, Saudi Arabia owned just over 98% of Aramco. Of this 98%, the Saudi government held 90%, while the sovereign wealth fund Public Investment Fund (PIF) owned the remaining 8%.

Aramco’s strategy to attract foreign investment aligns with Saudi Arabia’s broader goals of economic diversification. The successful secondary offering underscores sustained international interest in the Kingdom's economic transformation efforts. Widely seen as a litmus test for foreign investor confidence, the offering comes more than halfway through Saudi Arabia's Vision 2030 campaign. The ambitious initiative aims to reduce the economy’s dependency on oil by investing in diverse sectors, including electric vehicles and futuristic desert city projects, primarily funded by the USD 925bn PIF.

The proceeds from this share sale are expected to be channeled into the PIF, potentially enhancing the broader mergers and acquisitions landscape in the Kingdom and the region. The sovereign wealth fund and its portfolio companies have recorded a series of significant deals in recent years, including the Saudi Arabian Mining Company (Ma'aden), which made the largest deal so far in 2024 in the Middle East by acquiring a 25% stake in the Ma’aden Wa’ad Al Shamal Phosphate Company (MWSPC) for a consideration of USD 1.5bn.

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