Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF) is considering selling a part of its 70 percent share in Saudi Telecom Company (STC) while retaining majority ownership.
The sovereign wealth fund is planning to target international, local institutional and retail investors in the sale. Even though the size and structure of the potential deal have not yet been determined, it is confirmed that the fund will retain more than 50 percent in the telecom company.
“The potential transaction is expected to contribute to PIF’s establishment and development of new sectors, in addition to strengthening the Saudi economy’s growth and diversifying its sources of income,” PIF said in a statement.
The sovereign wealth fund holds a 70 percent stake in the company, which has more than 13,500 employees in Saudi Arabia and more than 19,000 across the group. The proposed divestment will add to the medium and long-term value for all of STC’s investors by diversifying the company’s investor base.
PIF stated that Goldman Sachs, HSBC, Morgan Stanley and SNB Capital have been appointed to evaluate the potential transaction options. No sale of shares will take place before further developments are announced to the market and all applicable approvals are obtained, it added.
In the period of April-June, the net profit of STC surged to $746.5 million. Revenue for the quarter rose 6.6 percent on an annual basis to $4.2 billion, almost $261 million more than the same period last year. In line with the kingdom’s privatization plans, STC sold 30 percent of its shares in a public offering in 2003 raising $9.6 billion.
STC, in a statement to the Tadawul stock exchange, said that it does not believe that the potential transaction will affect the company’s strategy, daily business or its employees.
The PIF, the main engine of the kingdom’s Vision 2030 initiative that seeks to diversify the Arab world’s largest economy and reduce its reliance on oil, under a five-year strategy aims to more than double the value of its assets under management to $1.07 trillion and to commit $40 billion annually to develop the domestic economy until 2025.
