July 6, 2022

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Saudi Arabia transferred $80 billion worth of Aramco shares to the Wealth Fund

Saudi Arabia transferred $80 billion worth of Aramco shares to the Wealth Fund

Saudi Arabia transferred about $80 billion in shares in a giant oil company Aramco to its wealth fund as part of efforts to diversify the kingdom’s hydrocarbon-dependent economy.

The transfer of a 4% stake in the state-owned Saudi Arabian Oil Company, known as Aramco, would support the Public Investment Fund’s plan to grow its assets under management to more than $1 trillion by 2025, from about $480 billion currently, the Saudi government said Sunday.

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The Saudi government, which will remain Aramco’s largest shareholder with a stake of more than 94%, has sought to monetize the country’s huge funds. oil assets And using the proceeds to invest in industries outside of oil as part of Crown Prince Mohammed bin Salman’s plan to restructure the economy by 2030.

An oil tanker at the headquarters of Saudi Aramco during a media tour in Dammam – Reuters / Ali Jarekji (Reuters/Ali Jarekji/Reuters Photo)

To help achieve this goal, Prince Mohammed, the kingdom’s daily ruler, has mandated the Public Investment Fund to invest in companies and industries not related to hydrocarbons. The government also transferred the $29.4 billion it raised from the Aramco IPO in 2019 on the Saudi stock exchange to the Public Investment Fund for publication.

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Earlier this month, people familiar with Aramco’s strategy said the kingdom had resumed plans to list more shares of Aramco, the world’s largest oil company, with an ambition to sell up to $50 billion of shares, which at current valuations would be 2.5%. company. The stock listing would be by far the largest in the history of capital markets and could be difficult to undo.

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The stock-selling effort is still in the planning stage, people said, however it could be delayed or changed. Riyadh has floated several different plans over the years aimed at raising funds through Aramco, some of which eventually faltered or were abandoned.

The transfer of shares to the Public Investment Fund will help bolster the fund’s strong financial position and high credit rating in the medium term, according to the government.

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In a separate statement, Aramco said that the deal is a private transfer between the Kingdom and the Public Investment Fund, and that Aramco is not a party to the transfer and has not entered into any agreements or paid or received any proceeds from the transfer.

It added that the transfer had no impact on Aramco’s operations, strategy or dividend policy.

Write to Summer Said at [email protected]