Saudi Arabia Gives Sovereign Wealth Fund fresh Cash

20.04.2023 - Saudi Arabia is transferring another 4% chunk of state-owned oil giant Saudi Aramco, parent company of petrochemicals and plastics producer SABIC, to Sanabil Investments, a vehicle wholly owned by the Kingdom’s Public Investment Fund (PIF).

The share transfer reduces the Saudi government’s direct ownership in Aramco, one of the world’s most valuable companies with a market capitalization of $1.9 trillion, to 90.18%.

State-run news agency SPA said the injection of shares worth almost $78 billion into the fund is for the purpose of “diversifying the national economy and expanding investment opportunities.” Commentators noted that the transfer comes on the back of a year of high oil prices following Russia’s invasion of Ukraine.

The Saudi government, through Crown Prince Mohammed bin Salman, shifted the first 4% of Aramco to the PIF in 2022 to increase the value of the fund’s assets under management to more than $1 trillion by 2025. 

Although Saudi Arabia’s wealth depends on oil, Aramco is continuously moving to reduce dependency on the commodity, as industrial companies worldwide focus on lightening their CO2 footprint.

The share injection could help further the PIF’s efforts to expand its role as a global investment player, business newspaper Wall Street Journal said.

Along with chemical projects, the sovereign wealth fund has invested billions into diverse sectors ranging from electric vehicles to banks and the UK’S Premier League soccer club. Last month it sealed deals to buy 80 new Boeing 787 Dreamliners to launch a new airline.

Author: Dede Williams, Freelance Journalist