Saudi Arabia ‘s sovereign wealth fund has doubled its stake in oil giant Saudi Aramco to 8%, as part of its strategy to diversify the economy of the world’s largest crude exporter.
After the transfer last year of 4% of Aramco’s shares to the Public Investment Fund (PIF), Crown Prince and de facto ruler of the kingdom, Mohammed bin Salmane, announced on Sunday the transfer of an equivalent tranche to the Saudi Arabian Investment Company (Sanabil Investments), a company wholly owned by PIF.
The Saudi state remains the main shareholder of the oil company after this transfer, with a stake of 90.18%. Aramco, a once totally state-owned company, had been listed with great fanfare on the Riyadh Stock Exchange in December 2019. The listing of 1.7% of the shares of the oil behemoth had brought $29.4 billion to the kingdom.
This new operation “is part of the long-term initiatives to stimulate and diversify the Saudi economy”, and strengthens “the financial position and credit rating of the PIF”, the kingdom’s sovereign wealth fund, the official press agency, SPA, said Sunday. The amount of the transaction was not specified, but it represents nearly $80 billion at the current price of Aramco shares listed on the Riyadh Stock Exchange.
Diversification plan
Last year, the same number of shares transferred to the BIP represented a similar amount. The Saudi sovereign wealth fund is headed by the powerful crown prince, Mohamed bin Salmane, who is carrying out a vast program of reforms aimed at reducing the kingdom’s dependence on oil.
PIF has made high-profile investments in recent years in international companies such as Uber and Disney, as well as in projects such as Neom, a $500 billion futuristic megacity being built in the Saudi desert. The sovereign wealth fund plans to increase its assets under management to $1 trillion by the end of 2025, according to Prince Mohamed. The kingdom relies heavily on its oil wealth to finance the diversification of its economy.
Aramco announced in March record profits of $161.1 billion in 2022, up 46% year-on-year, thanks to soaring crude prices. The world’s largest exporter of crude oil has pledged to become carbon neutral by 2060, but without abandoning investments in fossil fuels. Aramco announced that it has launched in 2022 “the largest investment program in its history,” increasing its spending by 18% to $37.6 billion.
