Saudi Sovereign Wealth Fund PIF Gets 4% of Aramco’s Shares

Saudi Crown Prince Mohammed bin Salman has transferred 4% of Saudi Aramco shares to Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), noting at the same time that the state – with more than 94% of the company’s shares- will remain its largest shareholder.

The bourse filing by Aramco said that this is a private shares transfer between the State and PIF in which the company isn’t a party and will not pay or receive any proceeds from the transfer.

According to Al Rajhi Capital’s estimates, the Kingdom is to see an increase in its oil revenues following the shares transfer to PIF and is now expected to report a surplus of SR125 billion on higher oil income this year, up from the previous government’s estimates of SR90 billion ($40 billion).

Aramco’s statement also noted that the transfer will not have an impact on its operations, strategy, dividends distribution policy, or governance framework nor will affect its total number of issued shares.

The transferred shares, as the statement underlines, will rank equally alongside other existing ordinary shares in Aramco.

According to Razeen Capital’s CEO Mohammed Al Suwayed, PIF has a spending obligation and, according to him, will use this portion to finance the said spending obligations.

Al Suwayed noted that PIF can benefit from these shares by different means – they can be sold privately to interested parties- but he doesn’t believe that this transfer will have a significant impact on Aramco’s shares, the price of which is now purportedly hanging by a thread to the dividend policy.

However, Aramco shares slipped 0.54 percent in response to Sunday’s transfer to the Saudi sovereign wealth fund which, in return, boosted PIF’s value by around $80 billion.

The PIF said earlier that this step aligns with its efforts to improve its asset base as it plans to tap debt markets globally while continuing to receive stable capital funding flows from the Saudi government during the growth stage of its ops.

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