Saudi Wealth Fund plans to sell telecommunications company stocks on a large scale | Business and Economic News

The sovereign wealth fund will provide a 5% stake in the most profitable mobile phone operator in the Middle East.

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Saudi Arabia’s sovereign wealth fund is preparing for this year’s largest secondary issuance in Europe, the Middle East and Africa, because it hopes to fund a huge investment plan to diversify an oil-dependent economy.

According to a statement submitted to the stock exchange, the public investment fund plans to raise up to US$3.1 billion through the sale of shares in Saudi Telecom, which provides a 5% stake in the most profitable mobile phone operator in the Middle East.

Starting from December 5th, a total of 100 million shares of STC will be issued at a price of 100 riyals (26.70 US dollars) to 116 rials. The sale of STC’s shares will exceed the US$2.8 billion allotment of shares of German Siemens Medical AG in March, according to data compiled by Bloomberg.

STC’s shares are discounted from Sunday’s closing price of 116.20 riyals. The stock has risen more than 6% this year, while the Tadawul All-Share Index has gained 28%. At 11 am in Riyadh, its trading price dropped by nearly 4%.

Saudi Arabia’s sovereign wealth fund is one of the main tools for Crown Prince Mohammed Bin Salman’s plan to keep the Saudi economy away from oil diversification. The company has previously stated that by 2025, it will invest approximately US$40 billion in the domestic economy each year.

Not forever

The crown prince said earlier this year that wealth funds should not hold all investments “forever” because he wants to reduce holdings and limit ownership of some companies to a minority stake. “So if you own 70% of a company, you are wrong-PIF will own 30% of the company, and they will sell the 40%,” he said at the time.

The fund borrows money, sells assets, and receives cash injections from the government because it is looking for ways to pay for new investments. PIF also stated that it uses funds generated from existing investments to fund new transactions.

As early as September, the fund planned to sell shares. At that time, the fund stated that it had hired a group of banks including Goldman Sachs, HSBC Holdings and Morgan Stanley to manage the partial sale of its 70% stake in STC.

Goldman Sachs, HSBC, Morgan Stanley and Swiss National Bank Capital are joint financial advisors and global coordinators of Citigroup and Credit Suisse Group. Saudi financial institutions will also serve as lead managers.

More from the statement:

  • Retail investors will receive approximately 10 million shares, representing 10% of the issued shares
  • The subscription period for institutional investors is from December 5th to December 9th
  • The retail subscription period is from December 7th to December 8th
  • Al Rajhi Bank, Riyadh Bank and Swiss National Bank acted as receiving banks

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