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Saudis Complete Transfer of 8% in Aramco to the Sovereign Wealth Fund

Saudi Arabia has completed the transfer of an 8% stake in its state oil giant Aramco from state ownership to the Kingdom’s sovereign wealth fund, Saudi Crown Prince Mohammed bin Salman said on Thursday.  

The transfer of the stake to fully owned companies of the Public Investment Fund (PIF) of Saudi Arabia is expected to solidify PIF’s strong financial position and credit rating, said the sovereign wealth fund, whose chairman of the board of directors is the Crown Prince.

The 8% stake in Saudi Aramco is currently worth about $163.6 billion, based on the current market capitalization of the world’s biggest oil firm, according to LSEG data cited by Reuters.

The transfer of the stake is being made from one government-controlled entity to another, but it will give the sovereign wealth fund more capital to finance the Crown Prince’s ambitious Vision 2030 program to diversify the economy away from oil by spending billions of U.S. dollars on futuristic projects, including NEOM.  

“The Crown Prince concluded that PIF continues with its mandate to launch new sectors, build new strategic partnerships, localize technologies and knowledge, and create more direct and indirect job opportunities in the local market,” the sovereign wealth fund said in a statement today.

After the completion of the stake transfer, PIF – which already held 8% in Aramco via direct ownership and wholly-owned subsidiaries – will double its stake in the Saudi oil giant, while the Kingdom of Saudi Arabia will see its stake reduced to 82.186%.

Less than 2% in Aramco is in hands of investors after the company’s IPO in December 2019, which became the largest in history.

Reports emerged earlier this year that Saudi Arabia was working with advisers to revive a new sale of stock in Aramco.

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The Saudis are looking to sell shares in Aramco on the domestic market and look to raise at least $10 billion from the follow-up offering, anonymous sources with knowledge of the plans told Bloomberg at the end of January.

By Charles Kennedy for Oilprice.com

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