News / Saudi Arabia

Saudi Arabia's Aramco purchasing 70% stake in SABIC

Wednesday, 27 March 2019 5:00 PM [ Last Update: Wednesday, 27 March 2019 5:05 PM ]

The logos of Saudi state oil company Aramco and Saudi Basic Industries Corporation (SABIC)

Saudi state oil giant Aramco said Wednesday it is buying a 70 percent stake in petrochemicals behemoth SABIC, in a deal worth $69.1 billion.

"Saudi Aramco today announced the signing of a share purchase agreement to acquire a 70% majority stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund of Saudi Arabia, in a private transaction for... $69.1 billion," Aramco said in a statement.

Saudi Arabia had sought to raise billions of dollars through a historic Aramco public offer to diversify its oil-dependent economy, but the plan has suffered a series of delays.

Observers see the acquisition of a controlling stake in SABIC as a complex alternative to raise much-needed cash for the Public Investment Fund (PIF), the kingdom's top sovereign wealth fund.

"This is a win-win-win transaction and a transformational deal for three of Saudi Arabia's most important economic entities," PIF managing director Yasir al-Rumayyan said in the Aramco statement.

The file photo, taken on October 23, 2018, shows, from left to right, Lubna Olayan, CEO and Deputy Chairperson of Olayan Financing, Yesir al-Rumayyan, Saudi managing director of Public investment Fund, Kirill Dmitriev, CEO of Rusian Direct Investment Fund, and Khaldoon Khalifa al-Mubarak, managing director and CEO of Mubadala Development Company, speaking at the opening ceremony of the Future Investment Initiative FII conference in the Saudi capital, Riyadh. (Photo by AFP)

"It will unlock significant capital for PIF's continued long-term investment strategy, underpinning sectoral and revenue diversification for Saudi Arabia."

SABIC, Saudi Arabia's largest publicly listed company, is said to have a market capitalization of around $100 billion -- the same amount the kingdom had sought to raise from Aramco's IPO.

The PIF, which hopes to control more than $2 trillion by 2030, is involved in a host of big-ticket global investments, buying a stake in Uber and pumping cash into a planned $500 billion mega city in the kingdom's northwest.

(Source: AFP)

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