Saudi Fund May Raise $106b From Aramco Stake Sale

Saudi Fund May Raise $106b From Aramco Stake Sale

Saudi Arabia’s sovereign wealth fund could receive $106b in cash from the sale to the public of a 5% stake in oil giant Aramco’s parent company, according to the Sovereign Wealth Fund Institute, Bloomberg informed.

“If an Aramco deal goes through, it could be a blueprint for other Saudi state-owned entities to follow, thus potentially increasing the cash pot of the Public Investment Fund (PIF) while enlarging domestic markets,” said a Las Vegas-based consultant and researcher in a report.

The listing of Aramco, or Saudi Arabian Oil Co., may happen as soon as 2017, Deputy Crown Prince Mohammed bin Salman had previously stated in an interview with Bloomberg News.

Transferring Aramco to the PIF would technically make investments the source of government revenue, not oil, Prince Mohammed said. Assuming that the money raised from the sale of a stake in Aramco is invested by PIF and not used by the government to fund the budget deficit, about 60% of the cash would probably be allocated to fixed income and the remainder to equities with some of the management outsourced.

PIF already holds about $87b worth of stakes in local companies including Saudi Basic Industries Corp., the world’s second-biggest chemicals manufacturer, and National Commercial Bank, the Middle East’s second-largest lender.

The Khaleej Times added that the kingdom’s Public Investment Fund will eventually control more than $2t of assets once the government transfers its ownership of Aramco to the fund to further finance development projects that would help make the country less dependent on oil.

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