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Saudi’s public investment fund to sell stake in STC, raise funds towards $1 trillion

Saudi Arabia’s sovereign wealth fund appointed two banks to investigate the sale of some of its majority shareholding in Saudi Telecom Company (STC)

The Saudi Arabia stock exchange puts its ownership of the operator at 70% PIF plans to double its assets to over $1 trillion by 2025 PIF aims to invest $40 billion annually into the local economy leading to 2025

Saudi Arabia’s sovereign wealth fund appointed two banks to investigate the sale of some of its majority shareholding in Saudi Telecom Company (STC), Reuters reported.

Unnamed sources told the publication that Saudi Arabia’s Public Investment Fund (PIF) is assessing the divestment of some of its huge stake in the operator as part of a wider strategy of cashing in on mature assets in favor of investing in new ones.

The Saudi Arabia stock exchange puts its ownership of the operator at 70%, with Reuters estimating the value of its complete stake at $50 billion.  

GSMA Intelligence figures put STC as the largest operator in the market by connections at end-Q1 with 17.8 million, followed by Etisalat brand Mobily (15 million) and Zain (7.2 million).

In addition to fixed commercial, TV, and mobile services, the company provides various wholesale and enterprise ICT products across a number of markets.

The fund, which holds $430 billion of assets, has hired Goldman Sachs and Saudi National Bank’s investment banking arm to arrange the transaction.

PIF plans to double its assets to over $1 trillion by 2025, Saudi Arabia’s Crown Prince Mohammed Bin Salman said in January.

Saudi Telecom’s shares have risen by more than 25% this year.

PIF’s strategy is to build an international portfolio of investments while also investing locally in projects that will help to reduce Saudi Arabia’s reliance on oil.

The PIF is also taking the country’s Tadawul stock exchange public later this year and it has also hired advisers for the initial public offering (IPO) of digital security company Elm. 

Saudi Telecom, meanwhile, is working on the IPO of its product and services development arm, Solutions by STC, and has hired advisers for the offering, sources told Reuters last October.

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PIF aims

PIF aims to invest $40 billion annually into the local economy leading to 2025. Since the last internal structure was approved in 2018, PIF has grown rapidly to over 1,100 employees, from just 40 staff in 2016.

 PIF has invested approximately $90 bn in the Saudi economy during that time while creating more than 331,000 new direct and indirect jobs in Saudi.