Saudi Arabia hopes to relinquish treasured stock holdings.
The Kingdom of Saudi Arabia's Prince Salman is not entirely content with the IPO of Saudi Aramco. Now, Riyadh aims to lure new investors for the oil conglomerate, raising its worth through share transactions.
Saudi Arabia intends to sell a hefty batch of Saudi Aramco shares, valued in billions of US dollars. The offering is anticipated to launch by Sunday, as reported by individuals privy to the information. This move is another trial for investor interest in the country's prized gem.
Saudi Aramco underwhelmed with its IPO in 2019, registering a valuation of $1.7 billion. Crown Prince Mohammed bin Salman, de facto leader of Saudi Arabia, had aspired for $2 billion. The oil giant's valuation has subsequently edged closer to the $2 billion mark, prompting the decision to sell a chunk of the government's considerable stake.
The offering, as usual, will likely reflect a discounted price from the current stock value of Aramco. The aim for Saudi Arabia is to hit a tag above the IPO level, given bankers and institutional investors' expectations.
Aramco: A Top-Tier Company
Aramco issued shares at 32 Saudi riyals during the IPO, equivalent to $8.53 per share in current currency. The proposed offer will be assessed against the IPO's adjusted price of 26.45 riyals. This price takes into account the distribution of "loyalty shares" to Saudis who have held unwavering possession of Aramco shares since the issuance.
The new offering is anticipated to draw considerable attention, as Aramco is a blue-chip firm that pays recurring, steadily mounting dividends. The stock's dividend yield of 6.6% is also enticing compared to US counterparts. ExxonMobil and Chevron offer yields of 3.3% and 4.2%, respectively.
Notwithstanding, shares of these sizeable US energy companies have proven more profitable for investors since Saudi Aramco's IPO. Over this period, the Aramco stock has increased by more than 20% in US currency, factoring in dividends. Converse to this, Exxon has soared around 107%, and Chevron has climbed 65%.
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Saudi Arabia is considering offloading a significant number of Saudi Aramco shares, aiming to boost the company's value through share trading and potentially surpass its 2019 IPO valuation. This share offering, subject to discounted prices, could attract interest due to Aramco's coveted status as a blue-chip company, its consistent dividend payments, and a dividend yield surpassing that of its US counterparts, such as ExxonMobil and Chevron.
Despite the initial underperformance of Saudi Aramco's share prices during its IPO, the company's stock value has increased significantly in US currency, outperforming stocks of major US energy companies like ExxonMobil and Chevron over the same period.
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