MBS said Saudi Aramco would sell more shares as part of plans to bolster the kingdom’s main sovereign wealth fund, which aims to increase its assets from $ 400 billion to $ 1 trillion by 2025.
Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS), the kingdom’s de facto ruler, said Thursday that Saudi Aramco would sell more shares as part of plans to bolster the country’s main sovereign wealth fund.
Aramco, the world’s largest oil company, completed the world’s largest public offering in late 2019, raising $ 25.6 billion and later selling more shares to bring the total to 29.4 billion of dollars.
The proceeds of this offering were transferred to the Public Investment Fund (PIF), MBS’s vehicle of choice to transform the Saudi economy and diversify away from oil revenues.
“There will be offers of Aramco shares coming in the coming years, and that money will be transferred to the Public Investment Fund,” MBS said at the Kingdom’s Future Investment Initiative conference. He said that the PIF will invest the product locally and abroad.
The prince also said that in addition to the additional income from the sale of Aramco shares, the megaprojects supported by PIF in Saudi Arabia – such as the Red Sea tourism project and the $ 500 billion NEOM business zone – have zero book value on the books of PIF and will generate returns the size of the fund’s assets.
On Tuesday, the head of Saudi Arabia’s PIF said Aramco may consider selling more shares if market conditions are favorable.
Aramco shares were down 0.14% on Thursday at 34.75 riyals ($ 9.26), above its IPO price of 32 riyals. Thursday’s closing price valued the company at $ 1.86 trillion.
Aramco’s initial public offering was seen as a pillar of economic diversification plans aimed at attracting foreign investment.
The $ 400 billion PIF plans to increase its assets to $ 1 trillion by 2025, a move that would make it one of the world’s largest sovereign wealth funds.
The fund plans to invest 3 trillion riyals ($ 799.83 billion) in new sectors over the next 10 years and, under a five-year plan, will create 1.8 million direct jobs and indirect by 2025, up from 331,000 by the end of the third quarter. from 2020.
Analysts and bankers have said that the PIF’s investment and development plans will require huge external funding.
Saudi Arabia has attracted tens of billions of dollars in funding from international banks and debt investors in recent years, but foreign direct investment is lagging behind.
The kingdom’s economy suffered a sharp contraction last year due to the coronavirus crisis and falling oil prices, with oil exports still accounting for more than half of the kingdom’s revenue.