Saudi Arabia transfers 4% of Aramco to wealth fund

Saudi Arabia has transferred 4% of the shares in state-controlled Saudi Aramco to the country’s sovereign wealth fund, the Public Investment Fund (PIF), the government said today, in a move aimed at supporting efforts to restructure the kingdom’s economy and diversify it away from oil.

The transfer, which was announced by Saudi Crown Prince Mohammad bin Salman, is valued at close to $80bn and will help boost the PIF’s assets under management to around 4 trillion Saudi riyals ($1.07 trillion) by the end of 2025, the government said. The crown prince is also the chairman of the PIF.

The move will also strengthen the sovereign wealth fund’s financial position and credit ratings in the medium term, as it relies on the value of its assets and the return on those assets under management for its funding strategy. The PIF, which is tasked with diversifying Saudi Arabia’s revenue sources away from oil sales by investing in other sectors, did not disclose what it plans to do with this stock.

After the transfer, the Saudi state will remain the largest shareholder in the company with “more than 94pc” of its shares, the crown prince said. Saudi Aramco sold 1.5pc of its shares in a partial intial public offering (IPO) on Saudi Arabia’s domestic Tadawul stock exchange in late 2019, raising more than $25bn for the government and setting Aramco’s valuation at around $1.7 trillion at the time. The proceedings from the sale were subsequently transferred to the PIF.

Source: ArgusMedia