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PIF’s Acquisition of Two Steel Companies Boosts Saudi Economic Growth

Saudi Arabia’s Public Investment Fund acquires full ownership of “Hadeed,” owned by SABIC (SABIC’s website)
Saudi Arabia’s Public Investment Fund acquires full ownership of “Hadeed,” owned by SABIC (SABIC’s website)
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PIF’s Acquisition of Two Steel Companies Boosts Saudi Economic Growth

Saudi Arabia’s Public Investment Fund acquires full ownership of “Hadeed,” owned by SABIC (SABIC’s website)
Saudi Arabia’s Public Investment Fund acquires full ownership of “Hadeed,” owned by SABIC (SABIC’s website)

Saudi Arabia’s Public Investment Fund (PIF) has announced the signing of a share purchase agreement worth around $3.3 billion to acquire a 100% shareholding in the Saudi Iron & Steel Company (Hadeed) from the Saudi Basic Industries Corporation (SABIC).

Simultaneously, Hadeed will acquire a 100% shareholding in AlRajhi Steel Industries Company (Rajhi Steel) from Mohammed Abdulaziz AlRajhi & Sons Investment Company (Rajhi Invest). This exchange involves newly issued shares in Hadeed.

The announcement of these two deals came in a statement released by PIF on Sunday.

In the statement, PIF indicated that the acquisitions will support its efforts in contributing to the development of the local industry and meeting the increasing domestic demand for products in the construction, automotive, utilities, renewable energy, transportation, logistics, and other sectors, aligning with the goals of Saudi Vision 2030.

“These transactions will bring together PIF’s financial capabilities and industry experience with Hadeed and Rajhi Steel’s leading technical and commercial expertise, to create a national champion in Saudi Arabia’s steel sector,” said Yazeed Al-Humied, the PIF’s deputy governor and head of Middle East and North Africa investments.

Financial analysts have described these deals as significant contributors to the growth of the Saudi economy in globally critical economic sectors.

They emphasize the diversification of income sources and achieving financial sustainability for the Saudi economy.

Furthermore, these acquisitions will bolster the investment portfolio of PIF and establish a new Saudi powerhouse capable of global competition in the iron and steel sector, with the potential to engage in numerous large-scale projects both within and outside the Kingdom.

Financial analyst Abdullah Al-Jubaili, in his conversation with Asharq Al-Awsat, sees the acquisitions as part of the government’s efforts to bolster the growth of the Saudi economy in globally significant economic sectors.

Infrastructure and iron sectors are considered key pillars of this endeavor.

Al-Jubaili further elaborates that PIF’s purchase of both SABIC's Hadeed and Al Rajhi Iron and their merger into a single entity will contribute to the emergence of a new Saudi powerhouse capable of global competition in this market.

This entity will be positioned to engage in numerous large-scale projects, both domestically and internationally.

Al-Jubaili explains that the timing of the acquisition coincides with the sharp decline in financial results for petrochemical companies. This move will assist SABIC soon to focus on enhancing its profitability in the petrochemical sector, given the global pressure on product prices and sector sales.

Additionally, the company will concentrate on its targeted sector and utilize its sales proceeds to expand in the petrochemical industry. This expansion may involve increasing the capacity of its factories or introducing new products to the markets.

 

 

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US Treasury Targets Russia's Gazprombank with New Sanctions

FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the US Treasury building in Washington, US, January 20, 2023. REUTERS/Kevin Lamarque/File Photo
FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the US Treasury building in Washington, US, January 20, 2023. REUTERS/Kevin Lamarque/File Photo
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US Treasury Targets Russia's Gazprombank with New Sanctions

FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the US Treasury building in Washington, US, January 20, 2023. REUTERS/Kevin Lamarque/File Photo
FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the US Treasury building in Washington, US, January 20, 2023. REUTERS/Kevin Lamarque/File Photo

The United States imposed new sanctions on Russia's Gazprombank on Thursday, the Treasury Department said, as President Joe Biden steps up actions to punish Moscow for its invasion of Ukraine before he leaves office in January.
The move, which wields the department's most powerful sanctions tool, effectively kicks Gazprombank out of the US banking system, bans its trade with Americans and freezes its US assets, Reuters reported.
Gazprombank is one of Russia's largest banks and is partially owned by Kremlin-owned gas company Gazprom. Since Russia's invasion in February 2022, Ukraine has been urging the US to impose more sanctions on the bank, which receives payments for natural gas from Gazprom's customers in Europe.
The fresh sanctions come days after the Biden administration allowed Kyiv to use US ATACMS missiles to strike Russian territory. On Tuesday, Ukraine fired the weapons, the longest range missiles Washington has supplied for such attacks on Russia, on the war's 1,000th day.
The Treasury also imposed sanctions on 50 small-to-medium Russian banks to curtail the country's connections to the international financial system and prevent it from abusing it to pay for technology and equipment needed for the war. It warned that foreign financial institutions that maintain correspondent relationships with the targeted banks "entails significant sanctions risk."
"This sweeping action will make it harder for the Kremlin to evade US sanctions and fund and equip its military," Treasury Secretary Janet Yellen said. "We will continue to take decisive steps against any financial channels Russia uses to support its illegal and unprovoked war in Ukraine."
Gazprombank said Washington's latest move would not affect its operations. The Russian embassy in Washington did not respond to requests for comment.
Along with the sanctions, Treasury also issued two new general licenses authorizing US entities to wind down transactions involving Gazprombank, among other financial institutions, and to take steps to divest from debt or equity issued by Gazprombank.
Gazprombank is a conduit for Russia to purchase military materiel in its war against Ukraine, the Treasury said. The Russian government also uses the bank to pay its soldiers, including for combat bonuses, and to compensate the families of its soldiers killed in the war.
The administration believes the new sanctions improve Ukraine's position on the battlefield and ability to achieve a just peace, a source familiar with the matter said.
COLLATERAL IMPACT
While Gazprombank has been on the administration's radar for years, it has been seen as a last resort because of its focus on energy and the desire to avoid collateral impact on Europe, a Washington-based trade lawyer said.
"I think that the current administration is trying to put as much pressure and add as many sanctions as possible prior to January 20th to make it harder for the next administration to unwind," said the lawyer, Douglas Jacobson.
Officials in Slovakia and Hungary said they were studying the impacts of the new US sanctions.
Trump would have the power to remove the sanctions, which were imposed under an executive order by Biden, if he wants to take a different stance, Jacobson said.
After Russia's invasion in 2022, the Treasury placed debt and equity restrictions on 13 Russian firms, including Gazprombank, Sberbank and the Russian Agricultural Bank.
The US Treasury has also worked to provide Ukraine with funds from windfall proceeds of frozen Russian assets.