Saudi Arabia moves $164 billion stake in Aramco to fund

Saudi Arabia moves $164 billion stake in Aramco to fund

The Saudi government transferred an additional $164 billion stake in Aramco to the Public Investment Funda move aimed at bolstering the cash flow of the state-backed investor who is ramping up spending on huge local projects.

Transfer of 8% stake will reduce direct government ownership in the world's largest oil company to 82%said the Saudi Press Agency. The measure will not have an impact on Aramco's dividendwhich the oil giant held at $29 billion for the third quarter despite a drop in production and weaker oil prices.

A recent decision to halt an increase in production capacity will reduce spending, potentially allowing for higher dividend payments, said Salih Yilmaz of Bloomberg Intelligence. The company will present its annual results on Sunday.

The PIF will now have a 16% stake in Aramco. The fund is a key part of Crown Prince Mohammed bin Salman's efforts to diversify the Saudi economy and Annual capital deployment is set to increase to $70 billion a year after 2025.

To help finance these efforts, the PIF has raised $7 billion from two bond sales so far this year.. Morgan Stanley expects to see another transaction in the second half of 2024 as the fund's spending needs continue to increase.

According to a recent prospectus, the fund had $15 billion in cash and equivalents in Septembera relatively low figure for such a large entity.

Thursday's transfer will increase the fund's assets to around $900 billion, bringing him closer to the crown prince's goal of $1 trillion by next year. The government last moved a stake in Aramco to the PIF in April 2023, when the fund took a 4% stake.

Aramco has a floating capital in Riyadh of approximately 2%. Its shares closed up 0.2% on Thursday, valuing the company at $2.05 billion.

Saudi Arabia considering plans to revive follow-on bid at companyBloomberg reported in January.