Saudi wealth fund rakes in $5bn as demand for stocks booms

Saudi Arabia’s plan to sell off stakes in local companies held by its sovereign wealth fund is already paying dividends – it’s set to rake in about $5bn over three months.

The Public Investment Fund (PIF) is set to raise $820m from selling a stake in digital security firm Elm Co. next month after pricing the share sale at the top of the pricing range. That’s in addition to the $3.2bn it raised from selling shares in Saudi Telecom Co., the largest secondary offering in the Europe, Middle East and Africa region last year.

It also raised $1bn from selling a stake in the Saudi stock exchange in December. Share sales in Saudi Arabia have seen huge investor demand, with most IPOs getting priced at the top of offering ranges and surging on their trading debut.

The Saudi benchmark index has jumped about 9 per cent this year, extending its 2021 gains of 30 per cent.

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.