A Saudi wealth fund plans to sell a huge stake in a telecom company | Business and Economics News

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

by Bloomberg

The Saudi sovereign wealth fund is preparing for what could be the biggest secondary offering of the year in Europe, the Middle East and Africa as it looks to fund a massive investment program to diversify the oil-dependent economy.

The Public Investment Fund plans to raise up to $3.1 billion through the sale of shares in the Saudi Telecom Company, offering a 5% stake in the most profitable mobile operator in the Middle East, according to a statement to the stock exchange.

A total of 100 million shares in STC, as the company is known, will be offered at a price ranging from 100 riyals ($26.70) to 116 riyals starting December 5. AG in March, data compiled by Bloomberg.

The shares of the Saudi Telecom Company are offered at a discount to the closing price of 116.20 riyals on Sunday. The stock has jumped more than 6% this year, compared to 28% in the Tadawul All-Year Index. It was trading down about 4% at 11am in Riyadh.

The Saudi sovereign wealth fund is one of the main tools of Crown Prince Mohammed bin Salman’s plans to diversify the Saudi economy away from oil. It was previously said that it will invest about $40 billion in the local economy annually until 2025.

not forever

The crown prince said earlier this year that the wealth fund should not hold all of its investments “forever,” as it looks to reduce holdings and limit ownership in some companies to a minority stake. “If you own 70% of a company, it is wrong — PIF will own 30% of that company and they will sell 40%,” he said at the time.

The fund has borrowed money, sold assets, and received cash payments from the government as it looks for ways to pay for its new investment. The PIF also says it is using money generated from existing investments to fund new deals.

The shares were due to sell as early as September when the fund said it had hired a group of banks including Goldman Sachs Group Inc. and HSBC Holdings Plc and Morgan Stanley to manage the sale of part of his 70% stake in STC.

Goldman Sachs, HSBC, Morgan Stanley, Swiss National Bank Capital are joint financial advisors and global coordinators with Citigroup Inc. and Credit Suisse Group AG. The Saudi Financial Corporation will also be the lead manager.

More statement:

  • Individual investors will receive about 10 million shares, representing 10% of the shares offered
  • The subscription period for institutional investors starts from December 5th to December 9th
  • The subscription period for retail investors starts from December 7 to December 8
  • Al Rajhi Bank, Riyad Bank and the Swiss National Bank act as receiving banks

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Andrew Naughtie

News reporter and author at @websalespromo