Saudi Arabia's sovereign fund may raise up to $3.1bn from sale of STC stake

Saudi Telecom Company is the biggest telecoms operator in the kingdom by market value. Waseem Obaidi for The National

Saudi Arabia’s Public Investment Fund is selling a 5.01 per cent stake in Saudi Telecom Company, the country's largest mobile operator, through a secondary share offering, that could raise as much as 11.6 billion riyals ($3.1bn) .

The kingdom’s sovereign wealth fund plans to sell 100.2 million shares at a price range of 100 riyals to 116 riyals per share, it said in a joint statement with STC on Sunday.

The offering is aimed at local institutional and retail investors as well as qualified foreign institutional investors.

The number of shares allocated to retail investors is 10.02 million, representing 10 per cent of the offer shares, and is subject to sufficient demand being received from retail investors, according to the statement.

The subscription period for the institutional tranche runs from December 5 to December 9. The subscription period for the retail tranche commences at 11.59pm Riyadh time on December 7 and will continue until 11.59pm Riyadh time on December 8. Retail and institutional tranches will receive shares on December 12.

The final price of the offering will be determined on December 10. The PIF and STC will be restricted from disposing and issuing shares in the company for twelve and six months, respectively, after the closing date of the offering, which is expected to be on December 14.

The $430 billion fund owns 70 per cent of Saudi Telecom and will retain a majority stake in the company after the offering.

The PIF is a central plank of the kingdom's Vision 2030 initiative that seeks to diversify the Arab world's largest economy and reduce its reliance on oil.

Under a five-year strategy that was announced in January, the fund aims to more than double the value of its assets under management to $1.07 trillion and to commit $40bn annually to develop the domestic economy until 2025.

The PIF is diversifying its investment portfolio and boosting the kingdom’s economic growth by taking advantage of new opportunities amid the coronavirus pandemic.

The value of the fund's US stock holdings nearly tripled to more than $43bn in the third quarter as it invested in a variety of companies from e-commerce and FinTech to biotechnology and fuel cell-powered commercial vehicles.

“Today’s announcement marks an important milestone for STC as a public company," said STC group chief executive Olayan Alwetaid.

"We welcome the steps taken by PIF to increase STC’s free float, which will undoubtedly further improve the trading liquidity of our shares and make them more accessible for a broader range of investors as we continue to implement a wide range of initiatives to create shareholder value.

"We are confident that this will also help realise our vision to be the leading digital services provider in the region and lead the growth of a diverse and digital economy in the Kingdom of Saudi Arabia.”

As part of the kingdom's privatisation plans, STC raised $9.6bn from the sale of 30 per cent of its shares in a public offering in 2003.

Goldman Sachs, HSBC, Morgan Stanley and SNB Capital have been appointed as joint financial advisers and joint global co-ordinators for STC and the PIF. Together with Citigroup and Credit Suisse, they are also joint bookrunners.

SNB Capital is acting as the lead manager of the offering. Al Rajhi Bank, Riyad Bank and SNB are acting as the receiving banks for the offering.