Saudi Arabia transferred shares worth about $80 billion in oil giant Aramco to the Public Investment Fund as part of efforts to move forward economic diversification efforts, according to reports.
The transfer of a 4% stake in Aramco will support the Public Investment Fund’s plan to grow its assets under management to over $1 trillion by 2025, from about $580 billion currently, the government said.
The 4% of Aramco that the Saudi government is transferring to the Public Investment Fund will make up about 14% of the $580 billion sovereign wealth fund.
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.
According to Bloomberg, the move also follows people familiar with the matter “saying last week that the government held talks with advisers on a potential second offering of Aramco stock, which could bring in more than its initial public offering.”
Monica Malik, chief economist at Abu Dhabi Commercial Bank, told Reuters the move “supports the outlook for the PIF raising funds internationally, including bonds, and could potentially support a future Aramco share sale going forward.”
But the move could cause some to question how green the PIF’s holdings are now with a large, valuable stake in the hydrocarbon-producing Aramco. As Bloomberg reports, last week, Moody’s Investors Service praised the Saudi fund for its limited exposure to “the energy and resources sector” or “environmental and social risks.”
