Zain KSA receives offer from PIF to buy additional 20% stake in tower infrastructure

The value of the deal is $194 million

Zain KSA is the Saudi unit of Kuwait-based telecoms operator Zain Group. Reem Mohammed / The National

Zain KSA, Saudi Arabia’s second-largest telecoms company, has received an offer from the Public Investment Fund to acquire an additional 20 per cent stake in the Golden Lattice Investment Company (GLIC).

The value of the deal is 726 million Saudi riyals ($194 million), Zain KSA said in a statement on Sunday to the Tadawul stock exchange, where its shares are traded.

The latest announcement follows a deal struck by Zain KSA earlier this year to sell at least 3,000 towers, out of the total of 8,069 towers to GLIC, which is owned by the kingdom’s sovereign wealth fund, Zain KSA, Prince Saud bin Fahad and Sultan Holding Company.

The PIF, Saudi Arabia's sovereign wealth fund, holds a 60 per cent stake in GLIC while 20 per cent is owned by Zain KSA. Sultan Holding Company and Prince Saud bin Fahad hold 10 per cent each.

“According to the sale price of the towers, the value of the shares in question was 605 million riyals, and thus the expected financial impact is 121 million riyals,” Zain KSA said.

It added the board will discuss the offer in the upcoming meeting and any developments regarding the transaction will be announced “in a timely manner.”

Zain KSA is the Saudi unit of Kuwait-based telecoms operator Zain Group.

It reported a 7.4 per cent annual decline in its second-quarter revenue to 124 million riyals, despite its revenue rising by 8.4 per cent to 2.3 billion riyals.

One of the world’s largest sovereign wealth funds, the PIF is at the centre of the Saudi Vision 2030 initiative to diversify the country’s economy from hydrocarbons.

The fund is investing heavily in building new projects in the kingdom. It is mandated to pump $40 billion to $50 billion into the local economy to generate jobs and boost the non-oil economic base of the country.

The fund is also boosting its investments to grow its portfolio in the kingdom as well as in other countries.

Earlier this year, the PIF, with more than 2 trillion riyals in assets under management, announced the setting up of three companies including Saudi Tourism Investment Company, or Asfar, to support the growth of the kingdom’s ​​tourism sector and Sawani Company to help the local camel farming industry grow.

It also established a company to develop and boost production of Ajwa dates in the Madinah region as part of efforts to further enhance the kingdom's food and agriculture industry.

Earlier this month, the fund also announced the establishment of Al Balad Development Company, which aims to develop Jeddah’s historic district as part of the kingdom’s push to grow its tourism sector.