Saudi Arabia has recently allocated an 8% share of its leading oil company, Aramco, to the Public Investment Fund’s (PIF) portfolio, effectively doubling the PIF’s holdings in Aramco through direct and indirect investments. This move aligns with the kingdom’s objective of diversifying its economy from oil dependency. The value of this stake is estimated at approximately $163.6 billion, based on Aramco’s current market value as reported by LSEG.
Saudi Arabia Boosts the PIF Fund With an 8% Aramco Stake Transfer
In 2022, the PIF directly acquired a 4% stake in Aramco and another 4% indirectly through Sanabil, a wholly-owned subsidiary of PIF. Reuters’ reports suggested that Saudi Arabia might be considering selling additional Aramco shares further to support the financing of its ambitious Vision 2030 program. Aramco’s initial public offering, which occurred before the pandemic, raised a historic $29.4 billion.
The PIF has not disclosed specific details regarding the entities to which the shares would be transferred. This transfer is part of Saudi Arabia’s broader strategy to enhance and diversify its economic landscape, creating new investment opportunities in accordance with Saudi Vision 2030, as stated by the state news agency SPA, quoting Crown Prince Mohammed bin Salman, who oversees the PIF.
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This initiative is expected to reinforce PIF’s robust financial standing and creditworthiness. Under the guidance of the Crown Prince, the PIF is instrumental in driving the country’s efforts to diversify its economy, including developing major projects and new sectors.
It has transformed from a traditional sovereign investor to a major global investment entity with significant stakes in various sectors, including technology and sports. Last year, with investments totalling $31.5 billion, the PIF became the most active sovereign wealth fund globally. Before this latest share transfer, the PIF managed assets worth around $700 billion.
Aramco stated in a filing with the Saudi Exchange that this transaction is a private transfer, and the company is not directly involved, entering into any agreements, or receiving any proceeds from it.
The transfer is said to have no impact on Aramco’s issued share count, with the transferred shares holding the same status as other ordinary shares. Furthermore, this move will not influence Aramco’s operational activities, strategic direction, dividend policy, or governance structure.
