Saudi Arabia plans to increase its investment in Aramco
Saudi Arabia's sovereign wealth fund is weighing up different options for investing in oil giant Aramco. To this end, it has presented different plans to reach more than a trillion dollars in assets within five years.
According to Bloomerg sources, some fund officials are considering how to liquidate their stake, which amounts to about $80bn in the world's largest energy company. This is as it seeks to raise funds for ambitious investment goals.
Bloomerg published a series of data showing that shares in Aramco are the sovereign wealth fund's largest holding, giving an incentive for any plans to invest in it.
Sources, who chose to remain anonymous, stressed that these talks are still at an early stage, and that no final decision has yet been made. The IMF representative declined to comment on the investment.
The situation began to attract attention when Aramco's shares started to rise by around 4.2 % last Thursday, reaching 42.25 rials - $11.26 -. This came after the price of oil barrels rose to $100 following Russia's invasion of Ukraine.
The state remains the oil company's largest shareholder. It owns more than 94% of the company's total shares. In mid-February, the government transferred a new Aramco stake to the wealth fund. This came shortly after Bloomberg reported that officials were discussing a new bid for the company.
This fund is one of Prince Mohammed bin Salman's favourite tools to help the country's economy and diversify it. He is currently considering a series of investments to reach around $1.1 trillion in assets by 2025. In addition, the Saudi government plans to increase domestic investment beyond oil and further develop the country's technology.
Green bonds are also being pursued, as Saudi Arabia wants to invest in environmental projects. A clear example is NEOM, a $500 million city, which will rely exclusively on renewable energy.
Before Aramco's shares were transferred, Moody's praised the fund for its investments. The company's future has changed dramatically since its unprecedented IPO. After suffering a slump in oil prices in the early stages of the pandemic, producers have more than recovered. Over the past year, Aramco's shares have risen 21%.
In recent days, the Saudi government has made a number of investments in different sectors. These include investments in local sports, specifically in football, and in new technologies. All these domestic investments are part of a plan to boost the country's economy and make it one of the richest countries in the world within five years. All of this is part of Saudi Arabia's Vision 2030 economic diversification plan.