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Saudi Arabia Draws Major Foreign Investment in Aramco Share Sale
Saudi Arabia has successfully placed more than half of an $11.2 billion secondary share sale in Aramco with foreign investors, according to insiders. The move is part of the kingdom's ongoing efforts to attract international investments and diversify its economy away from a predominant reliance on oil. Despite previous shortfalls in attracting foreign capital, this share sale marks significant international interest.
Sources indicate that there were multiple orders from investors in the U.S., UK, Hong Kong, and Japan. The demand for this secondary share offering reportedly exceeded the interest seen during Aramco's initial public offering (IPO) in 2019. Shares were priced at 27.25 riyals ($7.27), slightly below the upper price range initially set between 26.70 and 29.00 riyals. The process involved extensive planning and was internally referred to as Project Bond by the participating banks.
High International Demand
The transaction will introduce over 120 new international investors to Aramco, significantly boosting its foreign stakeholder base. The overall demand for the offering was reported to be more than $65 billion, combining interest from global blue-chip institutions and domestic retail investors.
Vision 2030 and Investment Strategy
Crown Prince Mohammed bin Salman's ambitious Vision 2030, which aims to fund diverse projects ranging from electric vehicles to futuristic cities, is at the heart of these efforts. The Public Investment Fund (PIF), Saudi Arabia's $925 billion sovereign wealth fund, plays a crucial role in these projects. Although some giga-projects have been scaled back, PIF is focused on pushing the kingdom's transformation agenda forward.
The proceeds from the share sale are expected to bolster the PIF, providing it with additional resources to finance its ambitious projects. Analysts and sources also suggest that these funds might contribute to addressing the kingdom's budget deficit, exacerbated by softened oil prices.
