Saudis giving away more assets amid low oil revenues
More reports is emerging from Saudi Arabia regarding the divestment of shares by major state-run asset holders as the kingdom struggles with negative economic growths caused by lower-than-expected crude oil revenues.
A Tuesday report by Reuters suggested that Saudi sovereign wealth fund the PIF is planning to sell its shares in Saudi Telecom as it seeks to attract more resources needed to help the kingdom grappling economic woes.
The report said that the Public Investment Fund has hired a major American bank and a Saudi bank to arrange the listing of telecoms company’s shares in the stock market.
The PIF holds around 70% of shares in the Saudi Telecom, a company which is valued at $50 billion.
It comes four days after a report showed that Saudi Arabia’s state oil company Aramco had sold 49% of its pipeline business for $12.4 billion to a consortium of American, Emirati, Chinese and South Korean companies.
Divestment of shares in major state-run businesses in Saudi Arabia comes as the kingdom is struggling to emerge from a long period of economic recession caused by low oil revenues.
The world’s largest exporter of oil has suffered from a global supply glut exacerbated by the coronavirus pandemic over the past year which affected the crude prices.
The country’s gross domestic product (GDP) continued to shrink by another 3% in the first quarter this year while the oil sector GDP contracted by 11.7% over the same period.
Riyadh has also struggled to sustain a costly military endeavor in Yemen, where it has been fighting a popular government ruling the capital Sana’a since 2015.
Saudi Arabia’s financial woes have dealt a major blow to young Crown Prince Mohammed Bin Salman’s aspirations to diversify the economy away from crude.
Estimates suggest PIF resources have dwindled from over $700 billion in 2014 to around $400 billion this month.
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