Saudi wealth fund PIF raises $3.2bn from sale of STC stake

Saudi Arabia’s sovereign wealth fund raised $3.2bn selling part of its stake in the Middle East’s most profitable mobile-phone operator.

The Public Investment Fund offered 120 million shares in Saudi Telecom at SAR100 ($26.7) each, lead manager SNB Capital said in a statement to the Saudi stock exchange. The wealth fund sold 6 per cent of its shares at a 9.1 per cent discount to STC’s closing price of SAR110 on Thursday.

The PIF, as the wealth fund is known, said the final offering was significantly oversubscribed by both domestic and international institutions, with more than 231,000 investors subscribing to the issue.

STC is up 3.4 per cent this year, compared with a 26 per cent gain on the Saudi benchmark Tadawul All Share Index. The stock fell 3.9 per cent last week after the announcement of the stake sale. However, analysts’ price targets imply a 13 per cent return for the stock over the next year.

The sale comes as Saudi Arabia pushes ahead with raising capital to diversify its economy, fulfilling Crown Prince Mohammed Bin Salman’s plan to move the economy away from oil. The PIF previously said it would invest about $40bn a year in the domestic economy until 2025.

Prince Mohammed said in March the PIF plans to sell off large stakes in companies it has held for a long time, noting that they shouldn’t hold investments “forever.”

The PIF said in September it would retain more than 50 per cent of STC.

Goldman Sachs Group, HSBC Holdings, Morgan Stanley and SNB Capital were the joint financial advisers on the stake sale and global coordinators with Citigroup and Credit Suisse Group AG.