Saudi Arabia transfers $80 billion in Aramco shares to sovereign wealth fund

Saudi Arabia has transferred 4% of stock in Saudi Aramco – worth US$80 billion – to the Kingdom’s sovereign wealth fund, as part of its substantial plans to diversify the oil-dominated economy.

Crown Prince and de facto ruler Mohammed bin Salman said the Aramco shares will bolster the Public Investment Fund’s (PIF) strong financial position and high credit ratings in the medium term.

In a government statement released yesterday, the Crown Prince stressed that the Saudi state would remain the dominant Aramco shareholder with a 94% stake. The Kingdom sold off 3% of state-run Aramco to investors on the domestic Tadawul exchange for a record $29.4 billion, in a much-awaited 2019 IPO.

The transfer will significantly boost the coffers of the PIF, which aims to have over $1 trillion in assets by the end of 2025. The PIF is Saudi Arabia’s main vehicle to execute the Vision 2030 framework to diversify the economy. Prince Salman has so far used the fund to invest in international tech companies (Uber), sports teams (Newcastle United) and EV makers (Lucid Motors).

“It supports the outlook for the PIF raising funds internationally, including bonds, and could potentially support a future Aramco share sale going forward,” said Abu Dhabi Commercial Bank chief economist Monica Malik.

Aramco raised $6 billion in Islamic bonds in June last year so that it could pay dividends to new shareholders, while PIF head Yasir al-Rumayyan, said that Aramco may consider selling more shares if market conditions are right.

The world’s largest oil company has benefitted from recovering prices in the last 12 months, with shares up 4% so far this year, valuing the company at $1.99 trillion, behind only Apple and Microsoft Corp. Oil prices recently touched $94 a barrel, amid concerns over tight global supplies.