Saudi Arabia shifted an 8% stake in the oil company it controls, Aramco, to the kingdom’s sovereign wealth pool, the Private Investment Fund. The transfer comes as the nation rejiggers its finances for a capital spending push meant to diversify the economy beyond petroleum.
The PIF now holds a 16% position in Aramco, officially known as the Saudi Arabian Oil Group. Aramco, with a market cap of about $2.1 trillion, is the fourth largest public company in the world. Reuters has reported that Aramco is eyeing selling more shares to the public.
The transfer, announced on Thursday, bolsters the PIF’s plan to underwrite new industries and large real estate projects, such as the futuristic city Neom and massive sports facilities to host the 2029 Asian Winter Games and other athletic events. This ambitious undertaking is called Vision 2030. The financial infusion also would aid the PIF’s possible plans to go public, which in turn would fuel its ability to raise more money.
The PIF now has $700 billion in assets under management, although its current cash dropped to $15 billion, as of September 30, 2023, off 70% from the year before. The PIF’s investment in Aramco can further help the fund’s coffers, owing to the oil company’s generous dividends: Aramco stock yields 3.82%. The fund also has raised $7 billion from two separate bond sales this year. The PIF aims to reach $2 trillion in assets by 2030.
The transfer of Aramco shares to the PIF “is a continuation of Saudi Arabia’s long-term initiatives to boost and diversify the national economy and expand investment opportunities in line with Saudi Vision 2030,” said Crown Prince Mohammed bin Salman, the PIF’s chairman and the country’s prime minister, in a statement released through state news agency SPA.
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Tags: Aramco, Asian Winter Games, Bonds, cash, Mohammed bin Salman, NEOM, PIF, Saudi Arabia, Vision 2030