Thread by @MaanoMadima

Saudi Arabia's Crown Prince Mohammed bin Salman previously announced that Saudi Arabia is in discussions to sell 1% of Saudi Aramco to a "leading global energy company".

Aramco reported a net income of $25.5 billion in Q2 of 2021 vs $6.6 billion in Q2 of 2020. This is a ~286% ⬆️

Aramco promised to pay a $75 billion annually to investors for five years after the IPO. This was made in order to attract foreign investors during the IPO.

That dividend is of $75 billion is a crucial source of funding for Saudi Arabia government, which owns 98% of the company.

In Q1 of 2021, Saudi Aramco declared dividend of $18.8 billion which was paid in the 2nd quarter.

It has now declared a Q2 dividend of $18.8 billion that will be paid in the 3rd quarter.

Free cash flow was $22.6 billion in Q2 and $40.9 billion for the first half of 2021.

Saudi Aramco believes in going big or going home.

Saudi Aramco raised $6 billion through the world’s largest US-dollar corporate Sukuk.

Aramco’s net income for the first half of 2021 was $47.2 billion, which is a 103% increase over the same period in 2020.🔥

What is a Sukuk?

It is an Islamic financial certificate representing a portion of ownership in a portfolio of eligible existing or future assets.

Money is raised up front.

They are asset-backed, tradable and offer stable or variable income depending on the structure.

Sukuks come with a balloon payment on maturity, but that is based on the market price of the underlying asset, not the amount of money originally invested.

Since investors are buying into an asset and its cashflow, the structure does not require the payment of interest.

Aramco's gearing ratio decreased to 19.4% on 30 Jun 2021 from 23% on 31 Dec 2020.

What is the purpose of the gearing ratio?

It measures the extent to which a company funds its operations using money borrowed from lenders vs money sourced from shareholders (equity).