Saudi Arabia’s sovereign wealth fund is set to earn about US$5 billion in dividend payments every quarter from its stake in Aramco after the government handed it more shares in the state-controlled oil company, which then said it would boost shareholder payouts.

The hike in Aramco’s dividend, which is set to total at least US$124 billion this year, comes days after Crown Prince Mohammed Salman ordered the transfer of an 8 per cent stake in Aramco to the Public Investment Fund (PIF).

The PIF now holds a 16 per cent stake in Saudi Aramco, worth about US$333 billion, which translates to an annual payout of at least US$20 billion. That’s a handy boon for the fund as it prepares to ramp up spending over the next few years on projects like Neom – a more than US$500 billion new city under construction on the kingdom’s west coast. 

The PIF is committed to spending US$40 billion a year domestically to help diversify the country’s oil dependent economy, though its ability to fund such huge projects has increasingly been questioned by analysts at a time when the government is forecasting budget deficits until at least 2026. 

Its governor, Yasir Al Rumayyan, has said annual deployment is set to rise to US$70 billion from 2025. The fund has already raised US$7 billion from two bond sales so far this year.

Including its stake in Aramco, the PIF controls assets of about US$900 billion. According to a recent prospectus, it had US$15 billion in cash and equivalents as of September – a relatively low number for an entity so large. BLOOMBERG

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