(Bloomberg) — Saudi Arabia’s sovereign wealth fund has hired a group of banks to help sell part of its 70% stake in the Middle East’s biggest telecoms company, a deal that could raise as much as $12.9 billion.
The Public Investment Fund has hired Goldman Sachs Group Inc., Morgan Stanley, HSBC Holdings Plc and Saudi National Bank’s investment banking arm to “evaluate the potential transaction options” for part of its holding in Saudi Telecom Co., the fund said in a statement Thursday. The sale is intended to help “enable the recycling of PIF’s capital to new investments,” it said.
The PIF, as the wealth fund is known, would retain more than 50% in the company. That would give it the potential to raise up to $12.9 billion based on STC’s current market price, data compiled by Bloomberg show.
“Preparation is underway to determine transaction size and final structure, which will target international and local institutional investors as well as retail investors,” the fund said.
Saudi Arabia’s sovereign wealth fund is one of the main vehicles for Crown Prince Mohammed Bin Salman’s plans to diversify Saudi the economy away from oil. It’s previously said it would invest about $40 billion in the domestic economy a year until 2025.
The fund has borrowed money, sold off assets and received cash infusions from the government as it looks for ways to pay for its new investments. The PIF also says it uses money generated from existing investments to fund new deals.
Prince Mohammed said in March that the PIF would look to sell off large stakes in companies it has held for a long time.
“We shouldn’t keep our share forever, whatever mature investment we have, we’re going to sell,” he said.
The PIF sold a 70% stake in Saudi Basic Industries Corp. to Saudi Aramco last year for about $70 billion. It was also handed $40 billion from the kingdom’s reserves last year to invest in global markets amid a crash in asset values amid the initial spread of the coronavirus, and was given proceeds from Saudi Aramco’s $29.4 billion initial public offering in 2019.
That cash has been plowed into international investments including Lucid Motors Inc., luxury car maker Pagani and a private equity fund set up by former U.S. Treasury Secretary Steve Mnuchin. Domestically, the PIF is backing several large new development projects, including the estimated $500 billion new city of Neom.
PIF governor Yasir Al Rumayyan said earlier this month that the wealth fund was looking to raise money through a sale of green debt.
STC shares have risen 20% this year and closed at 127 riyals on Thursday before the PIF announcement.
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