Saudi Aramco, the world’s largest oil company, has taken advantage of high investor demand by selling an additional 154.5 million shares. Merrill Lynch Kingdom of Saudi Arabia, the stabilizing manager for the share sale, confirmed this on Tuesday.
Last month, Aramco launched a secondary public offering, initially selling 1.54 billion ordinary shares, which was about 0.64% of its issued shares, at 27.25 riyals ($7.27) each. Thanks to the greenshoe option, the total offering has now increased to around 0.70% of the company’s issued shares.
The greenshoe option, a handy tool in public offerings, allows companies to sell more shares than originally planned if there’s extra demand from investors. By fully exercising this option, Aramco shows just how much confidence the market has in its value.
This isn’t the first time Aramco has made headlines with a big share sale. Back in late 2019, the company raised a staggering $25.6 billion in its initial public offering, which was a world record at the time. They later increased that to $29.4 billion by selling an additional 450 million shares through a greenshoe option. The recent secondary offering also saw a positive market response, with shares rising to 28.35 riyals on the first trading day and recently closing at 28.15 riyals on Riyadh’s Tadawul bourse.
Merrill Lynch Kingdom of Saudi Arabia’s role in managing the greenshoe option has helped keep the market stable by balancing the supply and demand for shares, which helps reduce volatility. This strategic move underscores Aramco’s dedication to sound financial management and enhancing shareholder value.
Aramco’s successful share sale highlights its financial strength and stability. As the company continues to navigate the complexities of the global energy market, investors and analysts will be watching closely to see what strategic moves Aramco makes next.
Photo source: Google
By: Montel Kamau
Serrari Financial Analyst
10th July, 2024
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