PIF has no plans to cut stake in Saudi firms

16 November 2016

The kingdom’s main sovereign wealth fund says speculation on reducing equity holdings in Saudi Arabia is “inaccurate”

Public Investment Fund (PIF), Saudi Arabia’s biggest sovereign wealth fund has said it has no plan to sell its holdings in the local companies.

“Contrary to inaccurate media speculation this morning, the Public Investment Fund has no plan or intention to reduce its equity holdings in Saudi Arabia,” according to a PIF statement to media outlets.

News agency Bloomberg on 15 November cited unnamed sources as saying that the fund could divest some of its holdings in Saudi companies to free up cash in order to expand its international footprint. The PIF, with about $100bn worth of shares in listed local companies, is reviewing the stakes as it seeks to diversify its assets, the news report cited five people with knowledge of the matter. The fund could reduce its holdings in local companies and retain control through measures such as golden shares, according to one of the people.

The fund is at the heart of the kingdom’s economic diversification plan announced earlier in the year. Riyadh plans to float about 5 per cent of the Saudi Aramco, the world’s biggest oil exporter, on the local and an international bourse and transfer the rest of company’s ownership to PIF. The move is aimed at inflating the size of PIF assets to about $2 trillion, which it will leverage to invest at home and abroad and generate investment income, a much needed alternative revenue line for the kingdom’s hydrocarbon-based economy.

Founded in 1971 to finance development projects in the kingdom, PIF plans to increase the proportion of its foreign investments to 50 per cent by 2020, up from 5 per cent now.

The PIF has already made major investments in US online transportation firm Uber and the new Middle East e-commerce site Noon.

The wealth fund has also agreed to start a $100bn technology fund with Japan’s Softbank Group Corporation.

It is considering increasing its stake in local power developer Acwa Power to up to 35 per cent, and will also take ownership of the King Abdullah Financial District, in a deal currently under negotiation with the PPA.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications