Saudi transfers oil giant Aramco shares to sovereign fund

RIYADH

Saudi Arabia said yesterday it will transfer 4 percent of the stock in the state-run oil giant Aramco to a sovereign wealth fund, an infusion valued at nearly $80 billion as the kingdom tries to overhaul its energy-dependent economy.

“The transfer of 4 percent of Aramco shares to the Public Investment Fund is part of the kingdom’s long-term strategy to support the restructuring of its economy,” Crown Prince Mohammed bin Salman was quoted as saying by the state-run SPA news agency.

The PIF has been Prince Mohammed’s vehicle to invest in everything from Uber to British football team Newcastle United. He said he wants the investment fund to have $1 trillion in assets by the end of 2025. The fund is the centrepiece of official moves to end economic reliance on oil.

“The shares will bolster the fund’s strong financial position and high credit ratings in the medium term, as the PIF relies on the value of its assets and the returns on its assets under management for its funding strategy,” he said.

The crown prince stressed that the Saudi state would remain the dominant Aramco shareholder with a 94 percent stake. The crown prince is also head of the PIF sovereign fund.

Aramco previously sold 1.7 percent of its shares on the Saudi bourse in December 2019, generating $29.4 billion in the world’s biggest initial public offering. That listing made Aramco one of the world’s most-valued companies alongside Apple and Microsoft.

It raised $6 billion in Islamic bonds in June last year, so that it could pay dividends to the new shareholders.

But Aramco announced $30.4 billion in profits for the third quarter of 2021, a massive rise from $18.8 billion for the same quarter the previous year, as oil prices took off again.

In December, Aramco said it had signed a $15.5 billion lease agreement for its gas pipeline network with a consortium led by BlackRock Real Estate of the United States and Hassana Investment Company, a Saudi-state-backed investment management firm.

Aramco and its assets were once kept under a vice-like government control, long off-limits to outside investment.

But with the rise of Crown Prince Mohammed, who has been pushing his “Vision 2030” reform program, the kingdom has shown readiness to cede some control.