Saudi PIF STC sale attracts global investors, supporting capital recycling and economic diversification

In a bold move reinforcing Saudi Arabia’s economic ambitions, the Public Investment Fund (PIF) has successfully raised SR3.86 billion ($1.03 billion) through the sale of a 2% stake in the Saudi Telecom Company (STC). This substantial offering, which consisted of 100 million shares priced at SR38.6 each, saw overwhelming demand from both local and international institutional investors, signalling strong confidence in the Kingdom’s telecom sector.

The transaction, described as the largest accelerated bookbuild offering ever conducted in Saudi Arabia and across the Middle East and North Africa (MENA) region, drew a remarkable level of interest. The sale was reportedly five times oversubscribed, with international investors making up a significant portion of that demand. Notably, sources revealed that international investors accounted for three times the expected interest, with 40% of the deal being allocated to them. The offering was executed as off-market negotiated deals on November 14, under the Saudi Exchange’s Negotiated Deals Framework.

The success of this stake sale underscores Saudi Arabia’s strategic positioning in the global market, particularly as it continues to advance its Vision 2030 objectives. Following this transaction, PIF still retains a commanding 62% ownership in STC, equivalent to 3.1 billion shares. The fund reaffirmed its commitment to STC, recognising the telecom giant’s pivotal role in shaping the future of Saudi Arabia’s Information and Communications Technology (ICT) sector.

“PIF reiterates the strategic importance of its ownership in STC and its diverse partnerships with the company through a number of PIF portfolio companies,” the fund stated. The sale aligns seamlessly with PIF’s broader capital recycling strategy, a key part of its mission to redirect capital towards emerging sectors and new ventures within the local economy.

The deal’s scale and swift execution further highlight PIF’s increasing influence as a financial powerhouse, not only within Saudi Arabia but also on the global stage. Currently managing assets valued at approximately $925 billion, the fund has been a cornerstone of the Kingdom’s economic transformation since its re-launch in 2017. PIF has since established nearly 100 companies across diverse sectors, pushing the Kingdom towards sustainable economic development.

At the core of PIF’s strategy is the goal of driving economic diversification and reducing Saudi Arabia’s dependence on oil revenues. By strategically divesting in areas like telecoms, the fund is recycling capital to invest in high-growth sectors such as technology, renewable energy, and tourism, supporting the Kingdom’s long-term sustainability goals.

The STC stake sale marks a new chapter for PIF, reflecting its ambitions to become a global investment powerhouse. The fund’s investment activities have consistently focused on not just growth but also sustainability, aligning with Saudi Arabia’s push for a greener economy. The transaction was supported by financial heavyweights Goldman Sachs Saudi Arabia and SNB Capital, who acted as joint global coordinators and bookrunners.

Sources involved in the deal noted that this accelerated bookbuild offering was conducted overnight, aligning with best practices commonly seen in developed financial markets. This innovative approach highlights PIF’s intent to adopt global standards, further integrating Saudi Arabia’s financial market with the international system.

The move also indicates PIF’s strategic foresight in capitalising on strong market conditions to optimise its investment portfolio. By leveraging the high demand for telecom shares, PIF has managed to unlock significant value while still maintaining a substantial stake in STC, thereby ensuring its continued influence over the company’s strategic direction.

As part of its ongoing investment strategy, PIF has been actively expanding into both public and private sectors. This latest divestment not only strengthens the fund’s capital base but also provides liquidity for future investments in emerging industries, which are key to Saudi Arabia’s ongoing economic and social transformation.

With Vision 2030 in its sights, PIF remains a critical driver of Saudi Arabia’s ambitions to become a leader in sustainable global investments. By continuously recycling capital and strategically reinvesting in high-potential sectors, the fund is effectively positioning the Kingdom as a hub for both local and international investors seeking opportunities in a rapidly evolving market landscape.

In the wake of this successful transaction, PIF’s focus will likely remain on leveraging its vast resources and strategic partnerships to foster innovation and growth. The fund’s ongoing efforts to diversify investments are set to play a crucial role in reshaping the Kingdom’s economy, ensuring it remains resilient and competitive in a rapidly changing world.