Saudi Arabia Transfers $163B Aramco Stake to Modernize Economy

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Saudi Arabia has transferred a $163 billion stake in its national oil company, Aramco, to its sovereign wealth fund, the Public Investment Fund (PIF), as part of efforts to grow assets and modernize the economy. This transfer of an 8% stake marks the third such increase in the PIF’s holding in Aramco over the past two years, bringing the fund’s total control to 16%. 

Initially, the government transferred a 4% stake to the PIF in February 2022, followed by another 4% to Sanabil, an investment arm of the PIF, in April 2023. Crown Prince Mohammed bin Salman, who leads the PIF and serves as the prime minister, stated that the transfer would strengthen the PIF’s financial position and credit rating. This move aligns with the Vision 2030 strategy aimed at diversifying the economy and reducing dependence on oil. 

Aramco emphasized that the private transfer would not affect its operations, strategy, or dividend distribution. Previously, the state-owned company sold a 1.7% stake in a 2019 IPO, raising about $29 billion. Following the latest transfer, the government’s direct stake in Aramco will decrease to 82%. 

In 2022, Aramco reported record profits of $161 billion due to high energy prices, with its dividends being a crucial revenue source for the Saudi government. The PIF, which managed around $700 billion in assets before this latest transfer, aims to manage $1 trillion by 2025, leveraging dividends from its increased Aramco stake. 

The PIF has become a significant investment vehicle for international financiers, supporting ventures from tech startups to football clubs. Yasir Al-Rumayyan, the PIF governor and a prominent non-royal figure in the kingdom, leads its expansion efforts. He also chairs Aramco and Newcastle United, a notable PIF overseas investment. 

This strategic move highlights Saudi Arabia’s ongoing commitment to transforming its economic landscape, strengthening its sovereign wealth fund, and securing a sustainable future beyond oil.