"Saudi Arabia set to launch $10 billion Aramco share sale on Sunday"

" Saudi Arabia set to launch $10 billion Aramco share sale on Sunday \r\n\r\nSaudi Arabia is preparing to formally launch a secondary offering of shares in oil giant Aramco as soon as Sunday, a deal that could raise more than $10 billion and rank among the largest of its kind in recent years.\r\n\r\nThe government plans to run a book-building process to take orders until next Thursday, people familiar with the matter said, asking not to be identified as the information is private. The deal has attracted informal interest from investors across the Mideast and Europe totaling over $10 billion, they said.\r\n\r\nThe offering will likely be priced at a further discount of as much as 10% to the trading price, though that could narrow based on investor demand, some of the people said. That\u2019s in line with secondary sales in Saudi Telecom Co. and Tadawul Group Holding, which operates the kingdom\u2019s stock exchange.\r\n\r\nNo final decisions have been made on the offering period. Terms of the deal, including its size, could still change, the people said. Aramco didn\u2019t immediately respond to requests to comment.\r\n\r\nThe offering is set to come days after Aramco\u2019s stock dropped to the lowest level in over a year. The deal opening will coincide with an OPEC+ gathering on Sunday to discuss oil output policy, with most market-watchers expecting the group to maintain supply curbs. That would keep Saudi Arabia\u2019s production near the lowest level in about three years.\r\n\r\nThe kingdom is lining up a slate of banks including Citigroup Inc., Goldman Sachs Group Inc. and HSBC Holdings Plc for the deal, Bloomberg News has previously reported. Local firms including Saudi National Bank are likely to be involved, people familiar with the matter said, while Moelis & Co. has been acting as a financial adviser to help pick underwriters.\r\n\r\nThe follow-on offer would come almost five years after Saudi Arabia raised about $30 billion in Aramco\u2019s IPO, which was the world\u2019s largest ever stock sale.\r\n\r\nSome of the Wall Street banks likely to be involved in the secondary offering also worked on that listing, when they were paid just over $100 million. In comparison, banks including Goldman and JPMorgan split about $60 million from helping Peloton Interactive Inc. raise $1.2 billion in 2019.\r\n\r\nLow fees are common in the Middle East. For bankers, the share sale is a trade-off between working for less and the prospect of winning more business in the largest Gulf economy that\u2019s in the middle of a multitrillion-dollar overhaul.\r\n\r\n Economic Transformation \r\n\r\nProceeds from the share sale will help fund big initiatives tied to that economic transformation. Crown Prince Mohammed bin Salman\u2019s plans include a push into artificial intelligence, sports, tourism as well as projects such as the $1.5 trillion development of Neom.\r\n\r\nThe deal comes at a crucial time for the kingdom, which holds an 82% stake in the $1.9 trillion firm. Crude oil prices are below the levels the government needs to balance its budget and Saudi Arabia has lagged behind its target of attracting more than $100 billion a year in foreign direct investment.\r\n\r\nThe government needs oil near $100 a barrel to pay for its spending plans, according to the International Monetary Fund. But global oil benchmark Brent, currently at about $85, is forecast to be near $79 in 2025 and $75 the following year, according to estimates compiled by Bloomberg.\r\n\r\nAramco\u2019s oil production is also restricted by OPEC+ policy as the group\u2019s de-facto leader Saudi Arabia tries to revive the market and boost prices. The company already has large unused output capacity, and earlier this year was ordered by the government to halt a further expansion of its capability.\r\n\r\n Saudi IPO Boom \r\n\r\nAgainst that backdrop, and amid questions about climate change and the future of fossil fuels, the offer will test global investors\u2019 appetite. Aramco\u2019s IPO had relied mostly on local investors, who\u2019d faced pressure from the government to back the deal after most foreign money managers balked at valuations.\r\n\r\nWhile the company\u2019s massive dividend payouts may now be a draw, its shares are expensive with price-to-earnings ratios almost 50% higher than Exxon Mobil Corp. and double Shell Plc\u2019s.\r\n\r\nAny deal will also coincide with a resurgence in the Saudi market for new share sales \u2014 investors have plowed in a combined $176 billion in orders for four deals in recent weeks. That\u2019s higher than the orders for Aramco\u2019s 2019 IPO and is weighing on the kingdom\u2019s stock market.\r\n\r\nRead More: Investors Pile Into Saudi IPOs With $176 Billion in Orders\r\n\r\nThe Tadawul All Share Index is trailing its emerging-market peers for the first time since the pandemic and has fallen almost 8% from its March peak \u2014 partly because of investors who\u2019re holding on to cash to invest in the offerings."

"Saudi Arabia set to launch $10 billion Aramco share sale on Sunday"

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