Saudi crown prince hints at more Aramco listings

Saudi Arabia's Crown Prince Mohammad bin Salman said today that parts of state-controlled Aramco will be publicly listed to raise funds for the country's PIF sovereign wealth fund.

Speaking at an investment conference in Riyadh, Crown Prince Mohammad gave no further details on the scope or timing.

"There will be listings of Aramco shares in the next few years, and the cash from that will be transferred into the PIF so that it is pumped inside the kingdom and abroad by the PIF," said the crown prince, who not only chairs the PIF but is also in ultimate charge of the oil industry and the economy.

It is unclear if he was referring to a second offering of shares in Aramco itself, or to a sale of its divisions or subsidiaries. PIF chairman Yasir al Rumayyan, who also chairs Aramco's board of directors, said recently that a second offering might occur if the company's valuation were satisfactory. Aramco has operations outside its core upstream oil and gas business, including a health and education division, and it could spin off its pipeline operations into a business that could be partially or fully listed.

Aramco raised just under $30bn in late 2019 from the flotation of 1.5pc of its equity, and the proceeds were transferred into the PIF. The Saudi government further beefed up the PIF in March and April last year, when it transferred $40bn into its coffers from the central bank's foreign currency reserves. This allowed the fund to go on a buying spree at a time when some international asset values had fallen because of the Covid-19 pandemic.

The crown prince said today that the PIF would boost its value to 4 trillion riyals ($1.06 trillion) by the end of 2025 and to more than SR7.5 trillion by 2030, from SR1.3 trillion in November, by two methods. One is by increasing the value of the large areas of land that comprise the PIF's projects, such as Neom in northwest Saudi Arabia and the massive Qiddiya entertainment venue on the outskirts of Riyadh, which currently have a book value of zero. Another would be through a large-scaled programme of privatising government assets.

The sovereign wealth fund would also see its value rise through "the natural growth of its investments", said Prince Mohammad. "I do not think that is difficult. I think without the slightest doubt that it is a goal that can be achieved," he said.

The PIF is the cornerstone of Riyadh's strategy to diversify its economy away from its heavy dependence on oil revenues. The fund plans to pump SR150 bn/yr into the domestic economy over the next five years, and "considers the private sector as its most important partners", Prince Mohammad said.

The Saudi government has transferred ownership of several of its assets to the PIF. Aramco is paying the fund $69.1bn for the government's 70pc stake in petrochemicals firm Sabic, with payments to be made in instalments until 2028.

By Samira Kawar