Saudi Wealth Fund anticipates $20B windfall from Aramco

Saudi Arabia’s sovereign wealth fund is poised to secure approximately $5 billion in quarterly dividend payments from its augmented stake in Aramco, following the government’s allocation of additional shares in the state-controlled oil company.

Aramco, in response, declared its intention to amplify shareholder payouts.  

The surge in Aramco’s dividends, projected to reach a minimum of $124 billion this year, transpired shortly after Crown Prince Mohammed Salman directed the transfer of an 8% stake in Aramco to the Public Investment Fund (PIF).

With the PIF now possessing a 16% stake in Saudi Aramco, valued at around $333 billion, this translates to an annual payout of at least $20 billion.

This windfall proves advantageous for the fund as it prepares itself to escalate expenditure in the coming years on expansive projects, including Neom – a new city underway on the kingdom’s west coast, with a budget exceeding $500 billion.  

The PIF, committed to annual domestic spending of $40 billion to aid economic diversification in the oil-dependent country, faces growing scrutiny from analysts.

This comes at a time when the government anticipates budget shortfalls until at least 2026. Yasir Al Rumayyan, the fund’s governor, has disclosed plans to increase annual deployment to $70 billion starting in 2025.

The fund has already generated $7 billion from two bond sales this year.  

In addition to its Aramco stake, the PIF oversees assets totalling approximately $900 billion. A recent prospectus revealed $15 billion in cash and equivalents as of September, a relatively modest amount for an entity of such magnitude.

What you should know

Saudi Aramco, officially known as the Saudi Arabian Oil Company, stands as the world’s largest oil producer, with its headquarters based in Dhahran, Saudi Arabia.

Being primarily state-owned, this energy giant has surpassed the profitability of tech giants like Apple and Alphabet’s Google.

The financial details of Saudi Aramco were made public in April 2019, just before its momentous debut international bond sale that successfully raised $12 billion.  

The spotlight on Saudi Aramco intensified in 2016 when Saudi Crown Prince Mohammed bin Salman bin Abdulaziz Al-Saud announced plans for a 5% listing, aiming for a valuation of approximately $2 trillion. 

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