Aramco: A company sought after by global investors

Last month, Saudi Crown Prince Mohammed bin Salman indicated during a TV interview that “there are talks for the acquisition of a 1 percent stake of (Saudi) Aramco by a leading global energy company in a deal that would boost Aramco’s sales.”

Aramco is the world’s largest oil company by market capitalization of SR7 trillion ($1.9 trillion), so a potential sale could be valued at SR72 billion ($19 billion). It is anticipated that the China Investment Corp. (CIC), one of the Chinese sovereign wealth funds, is likely to be the buyer.

Aramco went public on the Saudi Stock Exchange (Tadawul) at the end of 2019 and raised SR96 billion ($25.6 billion) through an initial public offering (IPO), setting the world record as the largest IPO in history.

Early this month, Aramco announced its first quarter financial results in 2021, posting a 30 percent year-on-year increase in net income to SR81 billion and declaring a dividend of SR70.5 billion to be paid in Q2 2021. The results were primarily driven by a stronger oil market and higher refining and chemicals operations, coupled with an improved economic environment in the first three months of 2021.

The company maintained its exceptional track record as a global energy supplier during the first quarter of 2021.

Basil M.K. Al-Ghalayini

Aramco demonstrated reliable upstream performance with an average total hydrocarbon production of 11.5 million barrels per day of oil equivalent in the first quarter of 2021, including 8.6 million barrels per day of crude oil. The company maintained its exceptional track record as a global energy supplier, achieving 100 percent reliability in its deliveries to customers during the first quarter of 2021.

As for the potential buyer, CIC is the world’s second-largest sovereign wealth fund after the Norwegian sovereign wealth fund. It is a wholly state-owned company specializing in foreign exchange fund investments and affiliated to China’s Ministry of Finance, with registered capital of $200 billion.

Aramco is Saudi Arabia’s crown jewel, which will always be part of the global asset allocation models of leading global investors and sovereign wealth funds. Currently, it is listed on Tadawul, but it has the option in the future to apply for a dual listing on one of the key international stock exchanges. Back in 2019, I was involved with the initial lobbying efforts on behalf of the London Stock Exchange (LSE) before the decision was made to go for solo listing on Tadawul with the option to dual list internationally, subject to regulatory approvals, at the most appropriate timing for the company.

• Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.