Saudi Fund Says It Has No Plans to Sell Off Local Equity Stakes

(Bloomberg) -- Saudi Arabia’s sovereign wealth fund said it has no plans to sell down the equity stakes it holds in local companies.

“The Public Investment Fund has no plan or intention to reduce its equity holdings in Saudi Arabia,” the fund said in an e-mailed statement Tuesday, reacting to a Bloomberg report that it’s considering options for its holdings as it looks at ways to diversify its portfolio.

The PIF, with about $100 billion worth of shares in listed local companies, is reviewing the stakes as it seeks to diversify its assets, five people with knowledge of the matter said, asking not to be identified as the discussions are private. The fund could reduce its holdings in local companies and retain control through measures such as golden shares, one of the people said.

The Tadawul All Share Index lost 2.1 percent in Riyadh on Tuesday, with Saudi Telecom Co. down 2.6 percent and National Commercial Bank declining 4.1 percent. PIF owns 70 percent and 44 percent respectively of those companies, according to data compiled by Bloomberg.

Saudi Arabia is planning to expand its sovereign wealth fund into the world’s largest by transferring ownership of Saudi Aramco to the PIF and also the proceeds from the oil company’s initial public offering. The fund could eventually control more than $2 trillion, according to Deputy Crown Prince Mohammed bin Salman, and plans to increase the proportion of its foreign investments to 50 percent by 2020, up from 5 percent now.

Foreign Investment

Overseas investing has so far been limited. The PIF in October said it is partnering with SoftBank Group Corp. to form a new fund to invest as much as $100 billion in the global technology industry in the next five years. Earlier this year it made its highest-profile international deal to date when it invested $3.5 billion in in U.S. ride-share company Uber Technologies Inc. PIF managing director Yasir Alrumayyan will take a board seat at the San Francisco-based company. In July 2015, it took a 38 percent stake in Korea’s Posco Engineering & Construction Co. for $1.1 billion.

Ahead of the possible assets sales, the PIF is also seeking to take on a more active role in the companies where it holds stakes, according to two of the people. It will be more involved in picking senior management and setting strategy, moving from its role as a more passive investor, the people said.

The PIF was set up in 1971 to support projects of strategic significance for the development of Saudi Arabia’s national economy. It is working with U.S.-based executive search firm Korn Ferry International to recruit senior bankers for positions including head of private equity, head of real estate, head of risk management and the head of markets, people with knowledge of the matter said earlier this year.

To contact the reporters on this story: Stefania Bianchi in Dubai at sbianchi10@bloomberg.net, Matthew Martin in Dubai at mmartin128@bloomberg.net, Dinesh Nair in London at dnair5@bloomberg.net. To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Cindy Roberts, Ross Larsen