In a strategic move, Saudi Aramco, the world's largest oil company with a market value of $2.25 trillion, is contemplating a secondary share offering on the Riyadh bourse, potentially raising up to $50 billion. This decision comes after consultations with advisors, signaling a significant step in the company's financial trajectory. The potential sale, slated to occur before the year's end, has garnered attention from multinational oil companies and sovereign wealth funds, highlighting their confidence in Aramco's resilience in the global energy market.
Saudi Arabia's decision to host the secondary offering on the Riyadh exchange is a deliberate move to mitigate the legal risks associated with an international listing. This choice underscores the Kingdom's commitment to safeguarding the interests of the company and its investors. By opting for a local exchange, Saudi Aramco aims to navigate potential regulatory complexities while maintaining its position as a global industry leader.
Crown Prince Mohammed Bin Salman's announcement in January 2021 about future Aramco share offerings was a clear indication of Saudi Arabia's strategic economic vision. The proceeds from these offerings are slated to fortify the country's primary sovereign wealth fund, the Public Investment Fund. This injection of capital into the fund aligns with Saudi Arabia's ambitious economic agenda, which aims to diversify the economy beyond oil-dependent industries.
With assets totaling around $700 billion, the Public Investment Fund has been instrumental in driving Saudi Arabia's economic diversification efforts. Despite experiencing a comprehensive loss of $15.61 billion in the previous year, the fund remains a pivotal instrument in the country's transition towards a more diversified and resilient economy. Its investments have significantly contributed to the development of new industries and the reduction of oil dependency.
While Aramco reported a 38% decline in second-quarter profit to 112.81 billion riyals compared to the previous year, the company's overall market performance remains robust. Its shares have surged by 19.6% this year, showcasing the company's resilience in a dynamic global energy market.
As the world watches, this move is poised to shape the future of Saudi Aramco and contribute to the economic diversification efforts of the Kingdom.