Saudi Arabia's Public Investment Fund has sold part of its stake in the Saudi Tadawul Group as it seeks to unlock value and further diversify its domestic investment.
The sovereign wealth fund successfully sold 12 million shares of its shareholding in the Saudi stock exchange operator through an accelerated bookbuild offering (ABO), representing 10 per cent of the company’s share capital.
The 2.3 billion Saudi riyal ($610 million) offering is among the biggest ABO transactions to take place in the Saudi market and the GCC region, the company said on Sunday.
An ABO is a form of equity offering that involves the issuance of shares in a short time period, with little to no marketing. The bookbuilding is also conducted within days.
With the deal's completion, PIF holds 72 million shares, or 60 per cent, of Tadawul.
“This transaction is in line with PIF’s strategy to recycle the fund’s capital and invest in emerging and promising sectors in the local economy,” Eyas AlDossari, head of investment advisory in the Mena investments division at the PIF, said.
“The strong interest generated from domestic and international investors is indicative of Saudi Tadawul Group Holding Company’s ability to attract a broad base of investors as one of the leading companies listed on the Saudi Exchange.”
PIF, which invests on behalf of the government in domestic and international markets, is at the heart of the kingdom's efforts to diversify its economy away from oil.
It is mandated to pump $40bn to $50bn into the local economy to generate jobs and boost the non-oil economic base of the kingdom.
Under its five-year strategy, the sovereign wealth fund plans to double its assets to $1.07 trillion, while creating 1.8 million direct and indirect jobs.
PIF will focus on 13 new sectors, including healthcare, renewables, telecoms, media and technology, food and agriculture, automotive, transportation and logistics, real estate, aerospace and defence, construction and building components and services.
It has stakes in global companies including ride-hailing company Uber and is a cornerstone investor in SoftBank’s vision fund that invests in global technology companies. It currently has assets of $620bn and plans to boost it to $2 trillion by 2030.
Tadawul is among the top 10 global stock markets and had a market capitalisation of about $2.8tn on December 8, 2021, when it listed. It became only the third publicly traded regional stock exchange, after the Dubai Financial Market and Boursa Kuwait.
Saudi Arabia has witnessed a surge of IPOs since it listed oil giant Saudi Aramco in a record $29.4 billion listing in 2019. There were a record 15 IPOs in 2021, bringing the total issuers on the Saudi Exchange to 210 at the end of December.
The latest transaction contributes to “increasing the company’s free float, enhancing the liquidity of the market for both local and international investors and is expected to contribute to the value creation for the company’s shareholders and for the Saudi market as a whole”, the PIF said.
Last month, PIF said it plans to invest 90bn Saudi riyals in the broader Middle East and North Africa region to expand its portfolio of assets and boost regional economies.
The PIF is setting up five investment companies after the Saudi Egyptian Investment Company's launch in August.
Together, the six companies will invest in several key sectors including infrastructure, real estate development, mining, health care, financial services, food and agriculture, manufacturing, telecoms and technology.
The PIF’s Saudi Egyptian Investment Company has already started investing in the Egyptian market.
In August, it acquired minority stakes worth about $1.3bn in four companies listed on the Egyptian Stock Exchange, Egypt’s planning ministry announced.
The four companies are Abu Qir Fertilisers and Chemical Industries, Alexandria Container and Cargo Handling, E-Finance for Financial and Digital Investments and Misr Fertilisers Production Company.
Earlier in October, the fund also acquired a 34 per cent stake in Egypt’s BTech, the 25-year-old consumer electronics retailer, for an undisclosed sum from Development Partners International, an Africa-focused investment company based in the UK.