Saudi Arabia’s Public Investment Fund generated $3.2 billion through a secondary share offering by selling a 6% interest in Saudi Telecom Company, the country’s largest mobile provider.
According to a joint announcement with STC, the kingdom’s sovereign wealth fund sold 120 million shares to local, foreign institutional, and retail investors at a price of 100 riyals per share. The number of shares sold has been reduced from 100.2 million to 100 million.
The secondary public offering, the first of its type in the Saudi Capital Market, is the largest equity capital markets transaction in the country since Saudi Aramco’s initial public offering. It is also the largest secondary follow-on deal in EMEA in the last three years, as well as the largest secondary follow-on transaction in Central and Eastern Europe, the Middle East, and Africa in almost a decade.
Following the transaction, the $430 billion sovereign wealth fund holds a 64% interest in STC’s issued shares. The telecom operator’s free float has climbed to 29.84 percent.
“The tremendous interest shown by local and foreign investors in this offering demonstrates STC’s lasting capabilities and intriguing future potential.” “PIF deputy governor and Mena investments head Yazeed Al-Humied stated.
“This transaction is consistent with PIF’s 2021-2025 strategy… to recycle capital by selling stakes in PIF-owned companies, as with the secondary public offering of PIF’s shares in STC and the IPOs of ACWA Power and Saudi Tadawul Group, and to reinvest the proceeds in emerging and promising sectors in the local economy.””
The PIF is a key component of the Kingdom of Saudi Arabia’s Vision 2030 effort, which aims to diversify the Arab world’s largest economy and lessen its dependency on oil.
According to a five-year strategy released in January, the fund wants to more than quadruple the size of its assets under management to $1.07 trillion and to devote $40 billion annually to domestic economic development until 2025.
By capitalizing on new opportunities created by the coronavirus epidemic, the PIF is broadening its investment portfolio and enhancing the kingdom’s economic development.
In the third quarter, the value of the fund’s US stock holdings nearly quadrupled to more than $43 billion as it invested in a wide range of industries, from e-commerce and FinTech to biotechnology and fuel cell-powered commercial vehicles.
“We are extremely pleased to see the strong interest in the offering from domestic and international investors… the increase in the company’s free float percentage… will further enhance the company’s international investment case and help make its shares accessible to a broader range of investors,” said Olayan M. Alwetaid, STC group chief executive.
STC generated $9.6 billion in a public offering of 30% of its shares in 2003 as part of the kingdom’s privatization aspirations.
The principal manager was SNB Capital. STC and the PIF were co-booked by Goldman Sachs, HSBC, Morgan Stanley, SNB Capital, Citigroup, and Credit Suisse.