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Saudi Arabia is due to decide later on Thursday whether to proceed with a sale of at least $10bn of its shares in national oil company Saudi Aramco, as the kingdom seeks further capital for its sovereign wealth fund.
Advisers to Saudi Aramco have been in Saudi Arabia making the last preparations for a secondary share offering for several days and the final decision is expected to be made by Crown Prince Mohammed bin Salman, according to people familiar the matter.
A final decision on the size of the offering will also be made later on Thursday, one of the people said, adding that the target could be much higher.
If the offering goes ahead, it would represent the culmination of a years-long plan to sell more shares in the state-owned oil producer after its record-setting listing in 2019. A sale would also coincide with Opec’s twice-yearly ministerial meeting, which takes place on Sunday, when the Saudi-led cartel will decide on oil production levels for the rest of the year.
Saudi Aramco’s litany of advisers have been involved in stop-start preparations for a share sale for months. On at least two occasions the government has decided not to go ahead at the final moment, one of the people said.
The decision on the share sale comes as Saudi Arabia is reviewing some mega-projects amid concerns about the cost of an ambitious economic diversification plan.
With the government focused on maintaining robust non-oil growth, the kingdom’s sovereign wealth fund, the Public Investment Fund, is likely to be the main beneficiary of any sale of shares in the country’s chief revenue generator.
The PIF is the main investment vehicle that the crown prince is using to drive the overhaul of the Saudi economy and it was the main recipient of funds from the original IPO in late 2019.
In that listing, Saudi Arabia raised an initial $25.6bn by selling 3bn shares at SR32 each, equivalent to 1.5 per cent of the company, with the proceeds going to the PIF. A month later it sold an additional 450mn shares, lifting the proceeds of the sale to $29.4bn.
Saudi Aramco shares on Thursday closed at SR29, down around a quarter from the high reached in 2022.
The government has repeatedly boosted the PIF’s funds in recent years, including with $40bn from the central bank’s foreign reserves at the onset of the Covid-19 pandemic. The state then transferred 4 per cent of Saudi Aramco shares to the PIF in early 2023, followed by another 8 per cent last March.
The transfers helped boost the size of PIF’s assets under management and provided it with a source of revenue through the dividends paid by Saudi Aramco. Last year Saudi Aramco boosted its shareholder payout to almost $100bn, as it reported the second-highest annual profit in its history.
The PIF had $925bn in assets under management at the end of 2023, with a stated goal of increasing that to about $1tn by 2025.
The PIF declined to comment. Saudi Aramco and the government’s media office did not immediately respond to requests for comment.