The government said on Sunday that Saudi Arabia’s Crown Prince Mohammed bin Salman has donated 4% of Saudi Aramco shares worth $80 billion to the national wealth fund.
In the medium term, the shares will strengthen the Public Investment Fund’s (PIF) excellent financial position and good credit ratings, according to the crown prince. The fund is the prince’s preferred mechanism for changing Saudi Arabia’s economy and diversifying away from oil earnings.
According to the statement, the state remains Saudi Aramco’s largest shareholder following the transfer procedure, holding more than 94 percent of the company’s shares.
The transfer of existing shares would help to boost PIF’s assets under management, which are targeted to grow to about four trillion riyals ($1.07tr) by the end of 2025, it added.
“It supports the outlook for the PIF raising funds internationally, including bonds, and could potentially support a future Aramco share sale going forward,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, said.
Saudi Aramco said in a statement the transfer was a private transaction between the government and the state fund.
“The company is not a party to the transfer and did not enter into any agreements or pay or receive any proceeds from that transfer,” it said.
It said the move would not affect the number of issued shares nor the company’s operations, strategy, dividends distribution policy or governance framework.
It added that the shares transferred would rank equally among other existing ordinary shares.