Saudi Arabia's PIF sells 2% stake in STC in $1bn deal

Sovereign wealth fund says it aims to reinvest its capital into emerging and promising sectors in the local economy

The STC office in Riyadh. In 2021, PIF raised $3.2 billion by offloading a 6 per cent stake in STC. Reuters

Saudi Arabia’s Public Investment Fund on Thursday announced the completion of the sale of 2 per cent of its stake, or 100 million shares, in Saudi Telecom Company, the kingdom's biggest mobile operator.

The final offer price was set at 38.6 Saudi riyals ($10.27) per share, the PIF said in a statement on Wednesday, following the accelerated book building process.

The total size of the oversubscribed offering to local and international institutional investors was 3.86 billion Saudi riyals ($1.03 billion), “making it the largest ever accelerated bookbuild offering” in Saudi Arabia and the Middle East and North Africa, the statement said. The PIF will remain STC’s largest shareholder, with a 62 per cent holding.

“This transaction is in line with PIF’s strategy to recycle its capital and invest in emerging and promising sectors in the local economy,” the fund, which has $930 billion of assets under management, said. “The offering will help to increase STC's free float and expand its international institutional investor base.”

Goldman Sachs Saudi Arabia and SNB Capital are the joint global co-ordinators and joint bookrunners on the deal.

STC, which offers digital products and services across the Mena region, will not receive any proceeds from the sale, SNB Capital said in a separate regulatory filing on the Tadawul stock exchange on Wednesday.

STC's shares have jumped more than 4.4 per cent since the start of the year, but were trading 2.5 per cent lower at 40 riyals a share at 11.32am UAE time on Thursday.

Unlike traditional offerings, an accelerated bookbuild offering is completed in a short time frame – usually within a single trading day – allowing the seller to raise capital or offload shares quickly without disrupting the market over a longer period.

The PIF raised $3.2 billion by offloading a 6 per cent stake in STC in December 2021. The fund 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.

Last month, its governor Yasir Al Rumayyan said the sovereign wealth fund plans to slash its foreign portfolio by about a third and focus more on domestic markets as it looks to establish the kingdom as the global hub of artificial intelligence.

In August, the PIF said its assets under management jumped 29 per cent to 2.87 trillion Saudi riyals ($765 billion) in 2023 as it solidified its Saudi holdings and diversified its international portfolio of assets. The annualised returns for the sovereign fund since 2017 rose to 8.7 per cent in 2023, up from 8 per cent a year earlier, the fund said in its annual report.