Saudi Aramco’s $12 billion share sale: Dividends attract Indian, Chinese, and other foreign investors

Saudi Aramco’s large dividend yields attract foreign investors amid climate change concerns and energy transition.

Published on: Jun 6, 2024, 19:39:17 IST

By HT News Desk | Edited by Abhyjith K. Ashokan

Prefer HTon Google

Share via

Copy link

Foreign investors have flocked to Saudi Aramco’s $12 billion share sale, mostly attracted by the dividends, sources who did not wish to be identified, told Bloomberg.

An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia. (REUTERS)

Those investors put in enough bids to more than fully cover the offering, the sources said.

Also Read | Saudi Arabia may announce landmark Aramco share sale soon: Report

This is a completely opposite situation from the oil giant’s 2019 IPO (Initial public offering) that ended up as a largely local affair, as investors weren’t happy with the valuation expectations, Bloomberg reported. The IPO eventually drew orders worth $106 billion, and about 23% of shares were allocated to foreign buyers back then.

Apart from Western institutions, demand for the offer was also strong among Asian investors, one of the sources told Bloomberg, signaling the kingdom’s growing ties with larger Asian economies like China and India. Local interest has also been strong.

Also Read | India saved $25 billion by importing Russian crude oil: Ministry data

Aramco’s huge dividend, coupled with a massive investment plan in renewable power, petrochemicals, gas and the opportunity to buy the stock at a discount, have drawn in investors, according to the report.

Investors willing to look past a steep valuation and the lack of buybacks would cash in on a $124 billion annual payout that Bloomberg Intelligence estimates will give the company a dividend yield of 6.6%.

The Saudi government currently owns about 82% of Aramco, while the Public Investment Fund holds a further 16% stake. The kingdom will continue to be the main shareholder after the offering, which adds to Riyadh’s efforts to raise cash and fill a budget deficit.

ABOUT THE AUTHOR
HT News Desk
Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.Read More

Stay updated with the latest Business News, stock market updates, petrol and diesel prices, gold and silver rates, income tax updates and major developments from India and across the world.