Saudi Arabia transfers $80 billion Aramco stake to kingdom’s wealth fund

Aramco is the world’s biggest oil company and is helping finance Prince Mohammed’s plan to transform and diversify the Saudi economy -- an initiative dubbed Vision 2030.

Saudi Arabia transferred a stake worth about $80 billion in state oil giant Aramco to the kingdom’s wealth fund as part of plans to boost its assets under management to over $1 trillion in four years.

Saudi Arabia said it will transfer 4% of its stock in the state-run oil giant Aramco to its state investment fund, a nearly $80 billion infusion of cash as it tries to overhaul its energy-dependent economy. (AP Photo) (AP)

The transfer of 4% in Aramco to the Public Investment Fund would also help restructure the country’s economy, state-run Saudi Press Agency reported, citing de factor ruler Crown Prince Mohammed bin Salman. The government will still be the largest shareholder in Aramco, with a more than 94% stake.

The move follows people familiar with the matter saying last week that Saudi Arabia held talks with advisers on a potential second offering of Aramco stock, which could bring in more than than its initial IPO. Aramco’s 2019 initial public offering -- in which it sold about 2% of its stock on the Riyadh bourse -- raised almost $30 billion.

The money was transferred to the sovereign wealth fund and was meant to support investments to shift the biggest Arab economy away from a reliance on oil sales.

The soaring price of oil as the global economy reopens after the impact of the coronavirus pandemic has helped lift Aramco’s share price from a low of 27.8 riyals in March 2020 to 37.3 riyals, giving it a market capitalization of almost $2 trillion.

Aramco is the world’s biggest oil company and is helping finance Prince Mohammed’s plan to transform and diversify the Saudi economy -- an initiative dubbed Vision 2030. He said in an interview last year that they may transfer a stake to the wealth fund, but he didn’t say how much or when it could occur.

The wealth fund, also chaired by the Crown Prince, has outlined a plan to grow its assets under management to about $1.1 trillion by 2025, while investing $40 billion annually into Saudi Arabia’s economy. The wealth fund is a key lever for the kingdom’s efforts to revive growth after a recession caused by the coronavirus pandemic and lower oil prices. Since 2015, the PIF has grown assets under management to $500 billion from about $150 billion.

More details:

• The deal is a private transfer between the kingdom and the PIF, and Aramco is not a party to the transfer and did not enter into any agreements or pay or receive any proceeds from the transfer, the oil producer said in a statement
• The transfer does not have an impact on Aramco’s operations, strategy, or its dividends distribution policy