Page 6 - MEOG Week 14 2021

MEOG FINANCE & INVESTMENT MEOG

MbS says Aramco could

reduce state dividend

SAUDI ARABIA SAUDI Arabian Crown Prince Mohammed bin The move could ease Aramco’s $73.5bn
Salman (MbS) announced last week that state oil annual state dividend requirement, while minor-
behemoth Saudi Aramco could reduce its pay- ity shareholders will be ring-fenced.
outs to the government, its majority shareholder. Speaking to Middle East Oil & Gas (MEOG),
Following the company’s partial listing on the Ian Simm, Principal Advisor at consultancy
local Tadawul Stock Exchange in late 2019, the IGM Energy, said: “In effect, Riyadh will sac-
state’s shareholding was reduced to 98.27%, with rifice a portion of its share on the premise that
3.45bn shares (1.73%) sold during the initial this will be recycled into the Saudi economy
public offering (IPO) and soon after. through Shareek. Prior to the IPO, prospective
MbS’ statement follows the recent launch of investors were promised a $75bn dividend, and
the Shareek (Partner) programme which seeks while this represents a departure from this, the
to facilitate SAR5 trillion ($1.33 trillion) worth roughly $1.3bn per year to minority sharehold-
of investments into the Saudi economy from ers is sacrosanct.”
private sector businesses by 2030 and from Ara- In 2019, Aramco promised a minimum
mco and Saudi Arabian Basic Industries Corp. $75bn dividend for each of the five years follow-
(SABIC), in which the NOC owns a 69% stake. ing the IPO. “We promised them that and we will
The programme is expected to bring about keep that promise,” said the Crown Prince.
the creation of thousands of jobs and increase Providing rationale behind the programme,
the private sector’s contribution to GDP by as MbS said: “We will recycle the money. We
much as 65%. shouldn’t keep our shares forever. Whatever
MbS added that Aramco and SABIC’s con- mature investment we have, we have to IPO. So
tributions would account for 60% of the total for example, if you own 70% of a company, [The
investment. Public Investment Fund (PIF)] should maintain
He noted that the Kingdom’s largest firms majority at 30% and sell 40%.”
have been asked to reduce their dividends to Meanwhile, Finance Minister Mohammed
increase capital expenditure. “That will lead to al-Jadaan told Reuters that the 24 largest listed
growth of the company so stakeholders will own companies will invest SAR2 trillion ($530bn)
more money. In exchange, the Saudi government by 2025 and another SAR3 trillion ($800bn) by
will help them with regulations, more subsidies 2030. He added that the PIF is a shareholder in
and other incentives,” he added. most of these firms.™

P6 www. NEWSBASE .com Week 14 07•April•2021