Saudi government transfers 4% stake in Aramco to Sanabil Investments

SINGAPORE (ICIS)–Saudi Arabia’s government has transferred another 4% shareholding in Saudi Aramco, this time, to a subsidiary of its sovereign wealth fund – bringing down its direct stake in the energy giant to about 90.2%.

Crown Prince Mohammed bin Salman announced on 16 April the completion of the transfer of the shares to Saudi Arabian Investment Co (Sanabil Investments), a subsidiary of Public Investment Fund (PIF), according to state-run Saudi Press Agency (SPA).

The share transfer is “a continuation of Saudi Arabia’s long-term initiatives to boost and diversify the national economy and expand investment opportunities in line with Saudi Vision 2030”, SPA reported.

“The transfer will also solidify PIF’s strong financial position and credit rating,” the news agency said.

Sanabil is a wholly-owned subsidiary of PIF, which is tasked with diversifying the country’s economy away from hydrocarbons.

In February 2022, the Saudi government had transferred 4% of Saudi Aramco shares directly to PIF.

Saudi Aramco, which is the world’s biggest crude exporter, listed 1.5% of its total shares on the Saudi bourse Tadawul in December 2019.

Strong oil prices boosted the company’s net profit to a record $161bn in 2022.

In a statement filed on the Saudi bourse on 16 April, Saudi Aramco said the Saudi government remains its largest shareholder, retaining a 90.186% shareholding following the share transfer to Sanabil.

The energy giant said it “is not a party to the transfer and did not enter into any agreements or pay or receive any proceeds from the transfer”.

Saudi Aramco closed on 16 April at Saudi riyal (SR) 33.1 ($8.8) per share, up 0.76% from the previous session.

SAUDI ECONOMIC DIVERSIFICATION CONTINUES
The share transfer to Sanabil follows an announcement on 13 April on the launch of four new Special Economic Zones (SEZ) in Saudi Arabia.

The new zones are King Abdullah Economic City (KAEC) SEZ, Jazan SEZ, Ras Al Khair SEZ and Cloud Computing SEZ located in King Abdulaziz City for Science and Technology (KACST).

“Special economic zones – or SEZs – are geographically defined areas that facilitate specific economic activities, such as investment, trade and employment, by providing competitive advantages and legislative frameworks that differ from the base economy,” the Economic Cities and Special Zones Authority (ECZA) said in a statement on its website.

“The incentives offered to companies cover both fiscal and non-fiscal incentives, including competitive corporate tax rates, duty-free imports of machinery and raw materials, 100% foreign ownership, seamless set-up procedures, and the flexibility in employing foreign labour,” it added.

Focus article by Nurluqman Suratman

($1 = SR3.75)