A large chunk of this month’s $11.2 billion share sale was allocated to foreign investors, leading one person involved in the process to describe it as the deal the IPO was supposed to be. Its success could create a template for future Aramco sell-downs, which now seem likely as the Crown Prince – who’s known as MBS – seeks cash to help fund his multitrillion-dollar Vision 2030 economic transformation project.
“We’re seeing an ‘all of the above’ attempt to raise investment capital for the Vision 2030 gigaprojects,” said Jim Krane, a fellow at Rice University’s Baker Institute for Public Policy in Houston. “Since the hoped-for FDI flows haven’t fully materialized, the Saudi government has turned to its tried-and-true backstop: Aramco.”
This account of the share sale, which Bloomberg News first reported in January, is based on interviews with dozens of people directly involved in the offering, who asked not to be identified discussing private meetings and conversations. Representatives for Aramco and the Saudi government did not respond to requests for comment.
Two Years Out
Back in 2019, Aramco’s initial public offering was marked by bitter clashes between investment banks and Saudi officials, who were angry that the IPO ultimately achieved a valuation of $1.7 trillion, much lower than the $2 trillion they’d hoped for at the time. This year’s share sale went off much more smoothly. In truth, the offer has been in the works for years and bankers were able to work together more cohesively, allowing the deal to progress in recent months even as war raged across the Middle East, sending the price of oil gyrating in response. “The increased interest from foreign investors is testament to Saudi Arabia’s success so far in keeping the war in Gaza and its regional repercussions at arms’ length,” said Torbjorn Soltvedt, an associate director of political risk at the consultancy Verisk Maplecroft.
Shortly after the IPO process was finished, Nasser got internal teams preparing for a secondary sale knowing that the kingdom was likely to want to further sell down its Aramco stake. He wanted Aramco ready to sell more shares whenever the government called.
