Thu. Jan 20th, 2022

The Sovereign Wealth Fund will provide a 5 percent stake in the Middle East’s most profitable mobile operator.

By Bloomberg

Saudi Arabia’s sovereign wealth fund is ready for what could be the biggest secondary offering of the year in Europe, the Middle East and Africa, as it wants to fund a major investment program to diversify the oil-dependent economy.

The Public Investment Fund plans to raise as much as $ 3.1 billion by selling shares in Saudi Telecom Co., which offers a 5% stake in the Middle East’s most profitable mobile operator, according to a statement to the stock exchange.

A total of 100 million shares in STC, as the company is known, will be offered from December 5 at between 100 riyals ($ 26.70) to 116 riyals. AG in March, shows data compiled by Bloomberg.

SBM’s shares are being offered at a discount to Sunday’s closing price of 116.20 riyal. The stock has climbed more than 6% this year, compared to the 28% increase in the Tadawul all-share index. It traded almost 4% lower in Riyadh at 11:00.

Saudi Arabia’s sovereign wealth fund is one of the main vehicles for Crown Prince Mohammed Bin Salman’s plans to diversify the Saudi economy away from oil. It has previously been said that it will invest about $ 40 billion a year in the domestic economy until 2025.

Not forever

The crown prince said earlier this year that the wealth fund should not hold on to all its investments “forever” as it seeks to reduce its holdings and restrict ownership in some companies to a minority stake. “So if you own 70% of a company, it’s wrong – PIF will own 30% of that company and they will sell that 40%,” he said at the time.

The fund has borrowed money, sold assets and received cash infusions from the government while looking for ways to pay for its new investments. The PIF also says it uses money generated from existing investments to finance new transactions.

The share sale was already planned in September when the fund said it had hired a group of banks, including Goldman Sachs Group Inc., HSBC Holdings Plc and Morgan Stanley to manage the sale of part of its 70% stake in STC .

Goldman Sachs, HSBC, Morgan Stanley and SNB Capital are the joint financial advisors and global coordinators with Citigroup Inc. and Credit Suisse Group AG. The Saudi financial institution will also be the general manager.

More from the statement:

  • Small investors will receive approximately 10 million shares, representing 10% of the shares offered
  • Subscription period for institutional investors starts from 5 December to 9 December
  • Subscription period for retail investors starts from December 7 to December 8
  • Al Rajhi Bank, Riyad Bank and SNB act as the receiving banks

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