Public Investment Fund (PIF) of Saudi Arabia, a leading sovereign wealth fund in the world with estimated assets of $320 billion, is reported to have considered an initial public offering (IPO) of its information security or joint-stock company Elm SA (ELM). According to sources, without disclosing the details of the deal, the PIF issued an order in recent weeks informing banks to prepare a proposal on how to go ahead with a sale of Elm shares to the public.
PIF’s Plans for IPO
Citing that investors should expect more of an exit strategy by PIF overcoming period, the sources reported that the sovereign wealth considered plans to sell up to 30% of its subsidiary stock unit, ELM in an IPO, which would be termed as “mid-sized”. Meanwhile, both the PIF and ELM were not available to respond to comments.
The sources reported that Saudi’s sovereign wealth fund issued a request for proposal (RFP) and asked banks to submit a bid bond, a debt instrument secured by a bidder, and a performance bond, which is a bond issued by a bank or other financial institution. However, it was reported that the proposed deal was unlikely to take place until next year.
ELM, which provides secure e-business services, information technology, and government project outsourcing in Saudi Arabia, last year participated in the series A+ round of financing for Syarah, an online marketplace for buying and selling cars in Saudi Arabia. The Saudi’s Joint Stock Company is fully owned by PIF, which is the investment arm of the Saudi Ministry of Finance.
PIF’s Double Strategies
PIF has sought two strategies for its IPO deals which were: building an international portfolio of investments and investing local projects that will help reduce Saudi Arabia’s dependence on oil. Last year, the PIF’s recycling unit had acquired a 100% stake in a Saudi firm, Global Environmental Management Services LLC (GEMS) and the fund declared that it also planned to increase its stake in Saudi’s ACWA Power to 40% from 25%.
The Governor of the Saudi’s fund, Yassir al-Rumayyan, said that the PIF was looking into investment opportunities in areas such as aviation, oil and gas, and entertainment. Rumayyan claimed last month that there would be plenty of potential investment opportunities once the coronavirus crisis fades away. It was reported that earlier this year the Saudi fund had bought stakes in oil-based companies including Royal Dutch Shell, Total, Eni, and Equinor.
Currently, PIF has a $2 billion stake in Uber Technologies and electric car company, Lucid Motors while it used to own a small stake in electric carmaker Tesla Inc. Nonetheless, the fund earlier on Sunday, May 17, 2020, denied a media report about a deal for a margin loan backed by its investment in SoftBank Group Corp’s Vision Fund.
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