The Public Investment Fund (PIF) sold 2% of the shares in Saudi Telecom Company (STC) for approximately USD 1 billion (SAR 3.86 billion).
This is part of the fund’s efforts to raise capital for the diversification program aimed at supporting the economy of the world’s largest oil exporter.
A major deal
The final offering price was SAR 38.6 per share for 100 million shares.
The figure is about 6% lower than STC’s closing price of SAR 41.1 apiece on Wednesday.
Goldman Sachs Saudi Arabia and SNB Capital acted as joint global coordinators and book-runners for PIF in the transaction.
The sale has been executed through off-market negotiated deals on Thursday before the Saudi stock exchange “Tadawul” opens.
So what
The Saudi Sovereign Wealth Fund clarified that selling part of its stake in STC aligns with its strategy to repurpose capital and invest in new and promising sectors within the domestic economy.
However, it emphasized the importance of maintaining its strategic ownership in STC.
PIF also noted that, after the sale, it will own 3.1 billion shares in STC — 62% of its issued capital. This still renders the fund its largest shareholder.
It also stated that the deal contributes to increasing the free-floating shares of the company and boosting its base of international investors.
In 2021, the fund sold 6% of STC for USD 3.2 billion.
Some context
The Saudi sovereign fund noted that the offering saw “wide interest” from both local and international institutional investors, with demand exceeding the total size of the offering.
This represents the largest accelerated book-building transaction in Saudi Arabia and the wider Middle East and North Africa (MENA) region, reflecting the attractiveness of the local financial market and investor confidence in it.
Reuters reported that the offering, which was restricted to local and foreign institutions, was covered approximately five times over.
About 40% of the offering was allocated to foreign investors.
This deal is the “first secondary offering” to wrap within 24 hours without a weekend break in Riyadh.
It’s worth noting that PIF, with assets under management nearing USD 1 trillion, is the driving force behind Crown Prince Mohammed bin Salman’s strategy, which focuses on the “Vision 2030” strategy.
This initiative aims to reduce the kingdom’s economic dependence on oil.
Now what
The remaining shares held by PIF in the country’s largest telecom company will be subject to a 60-day contractual lock-up period.
The company will not receive any proceeds from the offering, and the transaction will not result in any reduction in the ownership of other shareholders.
STC’s share price fell by about 3.9% to SAR 39.5 at the start of Thursday’s trading.
However, its shares have risen by more than 4% since the beginning of the current year.
