#Saudi Wealth Fund Sells Mecca Developer Shares For $253 Million - Bloomberg

Saudi Wealth Fund Sells Mecca Developer Shares For $253 Million - Bloomberg

Saudi Arabia’s Public Investment Fund raised about $253 million by trimming its stake in a Mecca-based property developer that’s become the kingdom’s best-performing equity listing this year.

The sovereign wealth fund sold 48 million shares or a 3.3% stake in Umm Al Qura for Development & Construction at 19.80 riyals apiece, a 9.92% discount to the last close. The block trade was handled by Citigroup Inc., SNB Capital and EFG Hermes. Following the sale, the wealth fund’s holding drops to 16.3%, with the remainder subject to a 90-day lockup.

Shares in the company, which is developing a $27 billion project in the Muslim holy city, have risen 47% this year, despite a slight pullback this month in line with broader weakness in Saudi stocks. It’s still the kingdom’s best debut this year, driven by enthusiasm around Saudi Arabia’s push into religious tourism as a key pillar to diversify its economy away from oil.

Saudi Arabia has been the Middle East’s most active IPO market this year, with companies raising nearly $4 billion. Still, performance has been uneven, with only two of the ten biggest listings currently trading above their offer prices. The Tadawul All Share Index is also among the worst performers in emerging markets, weighed down by concerns over prolonged oil-price weakness and the potential impact on government spending.

The PIF, as the wealth fund is known, has played a central role in deepening the kingdom’s capital markets by floating portfolio companies in recent years. These share sales have also been a tool to fund Saudi Arabia’s trillion-dollar economic transformation programme, which the wealth fund helms.

But the PIF has slowed the pace of listings amid softer market conditions, including in firms such as Saudi Global Ports, Bloomberg News has reported. The sell-down in Umm Al Qura represents the fund’s first share sale in over a year, after it raised about $1 billion by selling a stake in the kingdom’s main mobile-phone operator, Saudi Telecom Co.