Moataz Mohammed and Hadeel al Sayegh

DUBAI (Reuters), – Saudi Arabia’s Crown Prince Mohammed Bin Salman transferred 4% Saudi Aramco (SE:) shares worth $80 billion to the kingdom’s sovereign wealth fund, the government said on Sunday.

According to a crown prince statement, these shares will help strengthen the Public Investment Fund’s (PIF), strong financial position and good credit ratings. This fund is the preferred vehicle for the crown prince to diversify from oil revenue and transform Saudi Arabia’s economy.

According to the statement, Saudi Aramco’s largest shareholder is still the state, which retains 94% of its shares.

Transferring existing shares will help PIF increase its assets under management. These are expected to reach around 4 trillion Rials ($1.07 Trillion) by 2025.

Monica Malik (chief economist, Abu Dhabi Commercial Bank) stated that the PIF raises funds globally and supports future Aramco shares sales.

Saudi Aramco claimed in a statement, that the transfer was between Saudi Aramco and the state. It stated that the company was not involved in the transfer, and it did not agree to pay any money or get any benefits from it.

The company stated that the change would not impact the issued share count, nor its strategy, operations, or dividends distribution policy, and governance.

Additionally, the transfer of shares will rank equal among ordinary shares.

Saudi officials previously suggested that Aramco might sell shares. PIF didn’t comment.

Yasir alRumayyan is the head of the sovereign wealth funds. Last year, he said that Saudi Aramco would consider selling more shares, if the market conditions were right. However, the Wall Street Journal has recently reported that Saudi Aramco could be targeting a sale of up to 50 billion.

“The PIF is Saudi Arabia’s main vehicle to execute its 2030 vision, which suggests that this share transfer could imply further share sales down the line as a way to raise funds for the PIF to be reinvested elsewhere,” Yousef Husseini, associate director at EFG Hermes, said.

Aramco is the largest oil company in the world. In late 2019, Aramco completed the biggest initial public offering, raising $29.4 Billion. Proceeds were transferred to the PIF.

Aramco shares have risen by just over 4 percent so far in the year. The company is valued at $1.99 trillion. This puts it behind Apple Inc (NASDAQ) which is the most valuable company worldwide. Microsoft Corp (NASDAQ:). At Sunday’s close, the shares fell 0.7% to 37.05riyals.

Due to concerns about global shortages, oil demand has fallen sharply since the beginning of the pandemic. It is now trading at around $94 per barrel after a steep fall in energy prices.

($1 = 3.7516 riyals)