Kingdom Holding, the Saudi Arabian conglomerate owned by the billionaire Prince Alwaleed bin Talal, has struck a deal to buy a 16.2 per cent stake in Banque Saudi Fransi from Credit Agricole Corporate and Investment Bank at 29.5 Saudi riyals per share, valuing the transaction at about 5.76 billion riyals ($1.54bn).
The sale is subject to regulatory approvals and is expected to be completed in the second half of 2017, according to a statement on the web site of the Saudi Arabian stock exchange. The change in ownership of Banque Saudi Fransi will leave Credit Agricole Corporate and Investment Bank with a 14.9 per cent stake and Kingdom Holding with 16.2 per cent.
While Credit Agricole Corporate Investment may sell a further 5 per cent stake in Banque Saudi Fransi, it will remain a strategic investor in the bank and is committed to keeping a 9.9 per cent stake in the lender for at least a year after the deal goes through.
Shares of Banque Saudi Fransi were down around 2.9 per cent in early afternoon trading.
The bank had revenues of 6.4bn riyals in 2016 and assets of more than 203bn riyals at the end of 2016 .
Moody’s Investor Service earlier this year upgraded the outlook for Saudi Arabia’s banking industry to stable from negative, on expectations of a pickup in non-oil economic growth and an improvement in the levels of cash available for lending following a spate of sovereign bond sales.
The world's biggest exporter of crude oil has been taking measures to shore up its finances in the wake of the steepest drop in oil prices since the financial crash of 2008. As part of that effort, the government sold $17.5bn in bonds in its first international sale last year.