Saudi sovereign fund secures US$11 billion loan
Participants attend an investment conference in Riyadh on October 25, 2017 AFP/FAYEZ NURELDINE
RIYADH: Saudi Arabia's sovereign wealth fund said on Monday (Sep 17) it has secured its first ever international loan, boosting the kingdom's diversification drive after its flotation of state oil giant Aramco stalled.The Public Investment Fund said in a statement that it had obtained an US$11 billion (€9.4 billion) loan as "the first step in its strategic, medium-term debt funding programme".
"We are pleased to have completed this international syndicated loan," said the fund's managing director Yasir al-Rumayyan.The PIF had previously sought to raise billions of dollars through an initial public offering of shares in Aramco to fund projects that seek to reduce the kingdom's dependence on oil.Diversification is a key focus of Crown Prince Mohammed bin Salman's Vision 2030 plan, which aims to transform the Saudi economy through a slew of projects from hi-tech start-ups to a new mega city.But the Aramco IPO - once touted by Saudi officials as aiming to raise US$100 billion - has hit the buffers, with executives at the oil giant citing unfavourable market conditions.
That prompted the PIF to turn to other sources to fund its programmes.The fund said that under the Future Investment Initiative launched in October 2017, it aims to beef up its assets to US$400 billion by 2020.Its current holdings are estimated at US$230 billion, mostly in the form of major stakes in companies including SABIC petrochemicals, Saudi Arabia's largest listed firm.The PIF is in talks to sell its 70-per cent stake in SABIC to Aramco for an estimated US$70 billion as another way of raising cash.The fund is aggressively pushing a host of big-ticket investments - from Uber to the planned US$500 billion NEOM mega city on the Red Sea coast.Later on Monday, the fund announced it had inked a US$1 billion investment agreement with US electric car-maker Lucid Motors.Under the terms of the agreement, the two parties made binding undertakings to carry out the transaction subject to regulatory approvals and customary closing conditions, PIF said in a statement.The agreement aims to provide the necessary funding for the commercial launch of Lucid's first electric car in 2020, it said.It has also invested in British tycoon Richard Branson's space tourism company Virgin Galactic and pledged tens of billions of dollars to funds run by SoftBank and Blackstone.Since 2016, PIF has committed to investments worth US$95 billion including stakes in high-risk tech firms such as electric car company Tesla, according to the International Monetary Fund.After oil prices crashed in mid-2014, Saudi Arabia - the world's top crude exporter - accumulated budget deficits of more than US$260 billion and borrowed over US$100 billion to help finance the shortfall.But the central bank still has around US$500 billion in state reserves, bolstered by a recent partial recovery of oil prices.
Source : https://www.channelnewsasia.com/news/world/saudi-sovereign-fund-secures-us-11-billion-loan-10729040