Mohammed bin Salman, Crown Prince of Saudi Arabia and Chairman of the Board of Directors of the Public Investment Fund, has announced the transfer of 4% of the shares of the Saudi Arabian Oil Company (Saudi Aramco) to the Public Investment Fund, as part of the Kingdom of Saudi Arabia’s strategy to support the national economy plan known as Vision 2030.
Bin Salman stated that “the transfer of these shares is part of the Kingdom’s long-term strategy aimed at supporting the restructuring of the “national economy” in general and in support of the plans of the “investment fund” in particular. He claimed that this aims to raise the size of its assets to about 4 trillion Saudi riyals ($1.07 trillion) by the end of 2025, which means its rise by 167% ($667 billion) over the next five years.
He added that the shares transferred from Saudi Aramco to the Public Investment Fund will contribute to strengthening the fund’s strong financial position and high credit rating in the medium term.
This transfer has enriched the Public Investment Fund by about $80 billion, which means creating more job opportunities in the private sector in Saudi Arabia.
King Salman uses the Public Investment Fund to invest in different investment sectors at the local and international levels, as the Kingdom is trying to reduce its dependence on oil revenues.
Credit rating agency “Moody’s” said last week that the assets of the Public Investment Fund had grown from $152 billion in 2015 to $412 billion in 2020.
The fund has invested in a number of companies, including (Uber, the British football team Newcastle United, the electric car manufacturer Lucid Motors in Newark, California, and the NEOM sustainable city project).
Aramco is a Saudi company, officially called the Saudi Arabian Oil Company, which is the largest oil producer in the world, and the main economic engine of the Kingdom of Saudi Arabia for many years, in addition to being the main financial source for the Al Saud royal family, which still owns 94% of the company’s shares.
Saudi Aramco, the largest oil company in the world, with assets estimated at more than 2 trillion Saudi riyals, and recorded record profits in the third quarter of 2021, after oil prices and demand, witnessed a rise as the Corona pandemic receded.
The company’s net income in the third quarter of 2021 doubled, to reach 114.1 billion Saudi riyals ($30.4 billion), compared to 44.2 billion Saudi riyals in the same period in 2020.
These results are the highest for the company since its shares were listed on the Saudi stock market, which makes Aramco the most profitable oil company in the world.
Aramco is also benefiting from higher oil prices, which are trading above $90 a barrel, the highest level since 2014, when Aramco and its assets were subject to strict government oversight and were considered off-limits to foreign investment only.
The Crown Prince then came up with a wide-ranging reform plan known as the Vision 2030, and based on this vision.
In December 2019, Aramco sold some of its shares on the Saudi Stock Exchange, generating $29.4 billion in the world’s largest initial public offering.
The Saudi public now is wondering whether bin Salman would be able to maintain Aramco or would he cause its failure.
