Riyadh completed the sale of four percent of the state’s shares in Saudi Arabian Oil Co. (Aramco) to a company from the country’s Public Investment Fund (PIF), the sovereign fund said on Sunday.
The divestment of Sanabil Investments follows efforts to diversify the Kingdom’s oil-dependent economy by reorienting government investment to private and other sectors, as set out in Saudi Vision 2030. The wholly-owned PIF company commits about 3 billion dollars per year for private financing focused on small, venture and growth buyouts, Sanabil says on its website.
“His Royal Highness [PIF chair Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud] indicated that the transfer of part of the State’s shares to Saudi Aramco is a continuation of Saudi Arabia’s long-term initiatives to boost and diversify the national economy and expand investment opportunities agreement with the Saudi Vision 2030,” the PIF said in a press release.
The Saudi development roadmap aims to increase non-oil government revenue to $266.57 billion (SAR 1 trillion) by increasing investment in other sectors such as mining, tourism and small and medium enterprises, as well as the privatization of state assets. Last year, when Saudi GDP grew to $1.11 trillion (SAR4.156 trillion) at current prices, oil and natural gas recorded the largest contribution at 32.7 percent, according to data from the Saudi General Statistics Authority.
As the investment vehicle of Vision 2030, the PIF aims to bring $319.86 billion (SAR 1.2 trillion) of non-oil business to the economy by 2025, as stated on the delivery program page of the website vision of the roadmap.
Vision 2030 aims to increase PIF assets from $159.93 billion (SAR 600 billion) to more than $1.87 trillion (SAR 7 trillion).
The divestment of the state’s four percent stake in Aramco “will also consolidate PIF’s strong financial position and credit rating,” Sunday’s announcement added. Fitch Ratings has assigned PIF a long-term issuer default rating (IDR) of ‘A’ with a ‘positive’ outlook as of November, upgraded from ‘A’ with a ‘stable’ outlook in February following the same long-term review of Saudi Arabia. IDR in the same period.
The state remains the largest shareholder in the energy giant with 90.18 percent ownership.
“The Crown Prince concluded that PIF continues its mandate to launch new sectors, build new strategic partnerships, localize technologies and know-how and create more direct and indirect job opportunities in the local market,” the statement said.
The PIF announced on February 13, 2022, a four percent acquisition that would reduce the state’s Aramco shares to more than 94 percent.
He then said: “By 2025, the Public Investment Fund will deploy up to SAR 1 billion in domestic projects, increasing its local content contributions and contributions from its portfolio of companies by around 60 percent, creating direct and indirect jobs in the local labor market”.
To contact the author, please send an email jov.onsat@gmail.com
