Page 4 - DMEA Week 06 2022

DMEA COMMENTARY DMEA

Aramco considers share sale

as downstream deals continue

Aramco is reported to be considering listing more shares as it seeks to leverage resurgent
oil prices to further strengthen its finances and pay for its up- and downstream expansion.

MIDDLE EAST STATE-OWNED Saudi Aramco is reported to expected to announce massively improved per-
be holding early talks about the potential listing formance when it publishes its full-year 2021
of more of the company’s shares, in a move seen results in March.
WHAT: as raising significantly more than the firm’s 2019 In late 2019, the Saudi government sold a
The share sale could initial public offering (IPO). stake of 1.5% in Aramco in the IPO on TASI.
raise up to $50bn for the Meanwhile, the company continues to be This raised $25.6bn, making it the world’s larg-
company, which could active in major mid- and downstream deals, as it est-ever IPO, with a further 0.2% or so sold later
be leveraged to support has attracted another investor in its gas pipelines that increased the return to $29.4bn. This was
the expansion of the and is reported to be in talks over continuing its duly transferred to the Public Investment Fund
Kingdom’s sovereign refinery expansion. (PIF), which is the country’s main sovereign
wealth fund. wealth fund.
More shares The fund currently has around $480bn of
WHY: Sources were quoted this week by various media assets under management (AUM) and accord-
Aramco has monetised outlets, including Wall Street Journal, Bloomb- ing to PIF governor and Aramco chairman Yasir
pipeline assets erg and Dow Jones, as saying that Aramco is Al-Rumayyan, this is anticipated to climb to
and appears to be working with advisers to establish a plan to float SAR4 trillion ($1.07 trillion) by 2025 and SAR7.5
unburdened by recent additional shares on Riyadh’s Tadawul All Share trillion ($2 trillion) by the end of the decade.
concerns about dividend Index (TASI) stock exchange and potential sec- Prior to the 2019 IPO, Aramco had planned a
payments as it resumes ondary listing in London, Singapore or another listing of up to 5% on either the London, Tokyo
its refining expansion. international exchange. or New York stock exchanges, but with concerns
While the discussions remain in a prelim- about a lack of investor appetite as well as poten-
WHAT NEXT: inary stage, one source told Dow Jones that tial legal issues relating to the involvement of
The company is closing around 2.5% of the company’s shares could be Saudis in the 9/11 attacks in the US these ambi-
in on its long-held gross sold. With Aramco currently valued at around tions were pegged back.
global refining capacity $1.97 trillion, this could raise almost $50bn. In February 2021, Crown Prince Mohammed
target of 8-10mn bpd. The move comes as the company, which in bin Salman (MbS) said at the Future Investment
Q2 2020 slashed its capital expenditure budget Initiative conference that more Aramco shares
for the year by around $12bn in response to fall- could be sold in order to expand the PIF.
ing oil prices and the coronavirus (COVID-19) “There will be Aramco share offerings com-
pandemic, has seen its finances buoyed as crude ing in the coming years, and this cash will be
prices edge towards $100 per barrel. The firm is transferred to the Public Investment Fund,” he

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