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Saudi Crown Prince Mohammed bin Salman has announced a transfer of four percent of the ºÚÁÏÉçÇøn Oil Company’s shares to Sanabil Investments.

Sanabil is a wholly-owned subsidiary of the Public Investment Fund, which commits approximately $3 billion annually to private investments including venture capital, growth capital and small buyouts.

One of Sanabil’s main goals is to become a globally influential investor and help transform groundbreaking ideas into tangible realities. History is filled with countless examples of how bold ideas have disrupted traditional business models; ideas that enable new and improved ways of producing, consuming, and experiencing things.

This is why Sanabil is partnering with the architects of these ideas — entrepreneurs and businesses ​​who harness innovation to meet significant societal needs in scalable and sustainable ways.

That being said, why have four percent of Aramco’s shares been transferred to the PIF through Sanabil?

Transferring four percent of Aramco’s shares to Sanabil is a winning deal for both PIF and the company, because it will enhance the value of both entities.

The answer is simple: The PIF has a track record, since its establishment in 1971, of driving the growth of companies in the economic sector and beyond, and of creating job opportunities for Saudis — a key part of Saudi Vision 2030.

The transferring of Aramco shares to the PIF is in line with the PIF’s long-term investment strategy, which is to diversify its portfolio locally and internationally while making an impact felt beyond Saudi borders. This is why transferring shares of Aramco to the PIF is a perfect investment decision; the energy sector is one of the 13 most targeted economic sectors by the PIF, and Aramco is one of the world’s largest integrated energy and chemicals companies, creating value across three major global markets — Asia, Europe, and North America.

The crown prince indicated that the transfer of part of the state’s shares in Aramco is a continuation of ºÚÁÏÉçÇø’s long-term drive to boost and diversify its economy and expand investment opportunities, in line with Saudi Vision 2030.

He also indicated that the transfer will solidify the PIF’s strong financial position and credit rating while pointing out that the state will remain Aramco’s largest shareholder following the transfer, with total ownership of 90.18 percent of the company’s shares.

I believe that transferring four percent of Aramco’s shares to Sanabil is a winning deal for both the PIF and Aramco, because it will enhance the value of both entities. It will boost the PIF’s efforts to broaden its investment portfolio, and support Aramco’s growth by allowing it to benefit from the PIF’s strong local and international presence, and its commitment to invest in a diversified portfolio across a range of asset classes.

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• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz

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