Selling Stake
The POSCO Group has finally completed the sale of its 38 percent stake in POSCO Engineering & Construction (E&C) to the Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia, on Sept. 30. With the sale, the group has secured 1.24 trillion won (US$1.05 billion).
Accordingly, it took 13 months for the stock acquisition deal to be finalized through an actual inspection and negotiations after the group received a letter of intent (LOI) from the Saudi sovereign wealth fund at the end of Aug. last year. With the latest deal, POSCO retains a controlling stake of 52.8 percent, while the PIF becomes the second largest shareholder with 38 percent. Other stockholders, meanwhile, own stakes of 9.2 percent altogether.
The deal was successfully made since POSCO’s recent effort to improve its financial structure and strengthen business stability met the needs of the Saudi Arabian government to take proactive action against the post-oil era. POSCO E&C plans to improve its management transparency by involving two directors, who are recommended by the PIF, in business activities.
With the deal, the POSCO Group’s business in the Middle East is expected to grow. POSCO E&C will jointly invest in the joint construction corporation “POSCO E&C Saudi Arabia” with the PIF in the future. The ratio of shares will be four to six, respectively. The joint firm will take part in major construction projects, such as hotels, new cities, and railroad infrastructure ordered by the Saudi Arabian government. Moreover, it will expand cooperation areas into power and plant businesses.