Aramco-Sabic Deal Would Funnel Billions to Saudi Sovereign Fund - Bloomberg

Aramco-Sabic Deal Would Funnel Billions to Saudi Sovereign Fund - Bloomberg:

A potential deal between Saudi Arabia’s state-owned oil and petrochemical giants could enable the country’s sovereign wealth fund to raise billions of dollars it had hoped to collect from Aramco’s stalled initial public offering.

Saudi Aramco, the world’s largest oil company, is considering buying a strategic stake in the Sabic petrochemical group, Aramco said on Thursday in a statement, adding that the talks were at a “very early stage.” The Public Investment Fund, the country’s sovereign wealth fund, controls 70 percent of Sabic, as Saudi Basic Industries Corp. is known, with the rest of the company’s shares listed on the Saudi stock exchange.

If Aramco does buy a stake, the deal would let the PIF convert at least part of its shareholding into cash that it could then use to make other investments overseas. At current market prices, the PIF’s stake in Sabic is worth about $70 billion. For the government, the transaction would simply involve moving money from one pocket to another, as Aramco, Sabic and the PIF are all state-run entities.