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Saudi Arabia moves Aramco shares worth $80Bn to sovereign wealth fund

Saudi Arabia moves Aramco shares worth $80Bn to sovereign wealth fund

The government of Saudi Arabia has reportedly transferred 4% shares of the world's largest oil exporter, Aramco, valued at $80 billion, to the country's sovereign wealth fund.

Saudi Arabia's de facto ruler, Crown Prince Mohammed bin Salman, made this announcement as part of an attempt to re-balance the country's oil-dominated economy.

The move is also the newest indication that Saudi Arabia intends to open up the Arab world's biggest oil powerhouse and 'crown jewel'.

The crown prince stated that the moving of 4% shares of Aramco to the Public Investment Fund (PIF) is a part of the nation's long-term goal to help the economy restructure.

Crown Prince Mohammed stated that by the end of 2025, the investment fund should have one trillion dollars in assets. Before this contract, the fund, which is the cornerstone of government efforts to reduce economic dependency on oil, had less than half of that sum.

The prince further added that the shares will boost the fund's excellent financial position as well as outstanding credit ratings in the medium term, noting that the PIF's funding approach is based on the asset value as well as the returns on its assets under management.

With 94% ownership in Aramco, the Saudi state will remain the majority stakeholder. The PIF sovereign fund is also led by Crown Prince Mohammed.

Following the announcement, Aramco's stock dropped 0.6% in trading on Sunday. Experts, on the other hand, believe that the stock swap will enhance the sovereign fund.

Aramco as well as its assets were originally held in a vice-like grip by the government and was long closed to foreign investment.

However, following the ascension of Crown Prince Mohammed, who has been promoting his 'Vision 2030' reform agenda since 2016, the monarchy has demonstrated a willingness to relinquish some sovereignty.

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