Saudi Aramco's secondary stake sale had heavy foreign investor demand after it opened for subscription. Image Credit: Shutterstock

Riyadh: Saudi Aramco's mega stock offering is set to raise at least $11.2 billion, the biggest such deal globally in three years that will help fund the government's multi-trillion dollar push to transform the kingdom's economy.

The government is expected to sell almost 1.55 billion shares for SR27.25 ($7.27) apiece, people familiar with the matter said. That's a 6 per cent discount to the stock's last close before the deal was announced of SR29.

Saudi Arabia had demand for all shares in a few hours after the books opened Sunday and the deal attracted significant interest from foreign investors. It wasn't immediately clear exactly how much demand came from overseas, but those investors put in enough bids to more than fully cover the offering.

It's a turnaround from the firm's IPO in 2019, when global funds had largely stayed away and left the government reliant on local investors. That had put the spotlight on foreign participation in the current sale, even as the oil market outlook darkens amid strong supply and demand concerns in China.

Biggest dividend 

A top selling point this time around is Aramco's $124 billion annual dividend, the world's biggest. The company's stock, however, is expensive compared with major Western oil companies.

Aramco's shares closed at SR28.30 on Thursday, down 2.4 per cent for the week. They fell to the lowest in over a year in the days leading up to the offer, which is set to be the biggest since Rivian Automotive Inc's 2021 listing.

Secondary offerings are relatively rare in the region. Prior deals in the Kingdom include Saudi Telecom Co. and Tadawul Group Holding, which operates Riyadh's stock exchange. Both sales priced at a roughly 10 per cent discount.

The Saudi government is selling stock in the state oil behemoth to raise funds for ambitious plans by Crown Prince Mohammed bin Salman to revamp the country's economy. The massive spending plans mean the government needs oil at near $100 a barrel, according to the International Monetary Fund.

Oil prices, which haven't been near those levels since late 2022, slid in recent days to below $80. The Organization of Petroleum Exporting Countries and its allies earlier this month agreed to extend some of their supply cuts into 2025, but also laid out a framework to gradually return some of the voluntary cutbacks starting in October.

The Saudi government owns about 82 per cent of Aramco, while the Public Investment Fund holds a further 16 per cent stake.