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Saudi wealth fund seeks bridge loan of up to $8 billion

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The Public Investment Fund (PIF) is looking for a bridge loan that will be fully underwritten by lenders and would be repaid with proceeds from the $69.1 billion sale of its stake in SABIC to Saudi Aramco.

Sunday 14, April 2019

(Bloomberg) --Saudi Arabia’s sovereign wealth fund has started preliminary talks with banks to raise a loan expected to be between $5 billion and $8 billion as it seeks funding for new investments to diversify the Kingdom’s economy.

Talks with banks are said to be still at an early stage and the final size of the loan will depend on their response.

A spokesman for the PIF said its funding strategy includes four sources of finance, including capital injections and asset transfers by the government, retained investment returns as well as loans and debt instruments.

The PIF is a central part of the government’s effort to wean the economy away from oil under Vision 2030.

According to the Sovereign Wealth Fund Institute the fund aims to control more than $2 trillion by that date and currently has assets of about $290 billion and last year it raised $11 billion from a group of international banks in its first-ever borrowing.

Saudi Aramco, the world’s largest oil company, this week debuted in the international capital markets to fund part of the SABIC acquisition, issuing $12 billion of bonds.

Additionally, Aramco will pay for half of the SABIC stake when the deal closes this year and the rest over the subsequent two years.

The deal between the three government-owned entities, were the Kingdom’s sovereign wealth fund sold its 70 per cent stake in SABIC to Aramco, moves money from one pocket of the state to another and helps provide funding to the PIF that was expected to come from the initial public offering (IPO) of the state oil company.

 

TAGS : PIF, SABIC, Saudi Aramco, Vision 2030

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