Saudi Arabia’s strategy to sell holdings in domestic enterprises controlled by its sovereign wealth fund is already paying off, with and estimated profit of $5 billion expected in the next three months.
After pricing the share sale at the top of the pricing range, the Public Investment Fund (PIF) expects to raise $820 million from the sale of a stake in digital security business Elm Co. next month. That’s on top of the $3.2 billion it raised last year from the sale of Saudi Telecom Co. shares, which was the largest secondary offering in the Europe, Middle East, and Africa region.
In December, it raised $1 billion by selling a share in the Saudi stock exchange. Investor demand has been strong in Saudi Arabia, with most initial public offerings (IPOs) being priced around the top of their offering ranges and soaring on their first day of trading.
This year, the Saudi benchmark index has gained roughly 9%, extending its 30% gains from 2021.
Proceeds from the share sales will be a welcome boost for the PIF, which is planning to invest about $40bn into the Saudi economy this year as it looks to drive Crown Prince Mohammed Bin Salman’s plan to diversify the country’s economy away from oil by investing in areas like entertainment and tourism that barely existed in the kingdom before 2016.
The sales also mark a shift in strategy. For decades a holding company for government stakes in local firms, its looking to recycle its capital, selling off shares in companies it has held for years to invest in new firms. It still holds almost $140bn of Saudi equities, including large stakes in Saudi National Bank, Saudi Arabian Mining Co., and Saudi Electricity Co.
At the same time, the PIF is planning to plow deeper into global equity markets this year by investing about $10bn more into listed stocks.