Who are the shareholders of Saudi Basic Industries Corporation?

Saudi Basic Industries Corporation (SABIC) is one of the world’s leading manufacturers of chemicals, fertilizers, plastics and metals. It is headquartered in Riyadh, Saudi Arabia and was founded in 1976. SABIC is 70% owned by the Saudi government through the Public Investment Fund (PIF), with the remaining 30% publicly traded on the Saudi stock exchange Tadawul. Understanding who the major shareholders of SABIC are provides insight into the ownership structure and strategic direction of this important Saudi company.

SABIC’s Major Shareholders

Here is an overview of the major shareholders of SABIC:

Public Investment Fund (PIF)

The Public Investment Fund (PIF) is Saudi Arabia’s sovereign wealth fund. It was established in 1971 and is one of the largest sovereign wealth funds in the world with estimated assets of $620 billion as of 2022. PIF owns 70% of SABIC, making it by far the largest shareholder. As the investment arm of the Saudi government, PIF aims to develop strategic economic sectors in Saudi Arabia and diversify the economy away from oil. The fund is chaired by Crown Prince Mohammed bin Salman and is a key vehicle for his Vision 2030 reform agenda.

Institutional Investors

Institutional investors own around 16% of the publicly traded shares of SABIC. These include mutual funds, pension funds, insurance companies and other large professional money managers. Some of the major institutional investors in SABIC are:

• The Vanguard Group – 3.8% stake
• Norges Bank Investment Management – 1.5% stake
• BlackRock Inc. – 1.3% stake

These large global asset managers invest on behalf of millions of clients worldwide. Their substantial holdings reflect SABIC’s importance as a major public company in the Gulf region.

Foreign Governments

A number of foreign governments hold stakes in SABIC through their respective sovereign wealth funds. They include:

• Kuwait Investment Authority – 5.4% stake
• Abu Dhabi Investment Authority – 4.6% stake
• Qatar Investment Authority – 2.2% stake

These GCC sovereign funds have invested in SABIC to gain exposure to the fast-growing chemicals and plastics industry in Saudi Arabia and the Middle East. Their holdings underscore SABIC’s strategic regional importance.

Individual Investors

Individual shareholders own around 7% of the publicly floated shares of SABIC. Most of these likely consist of Saudi retail investors, given SABIC’s listing on Tadawul and importance in the Saudi economy. However, some international individual investors may also hold stakes directly or through mutual funds. While individual shareholders do not have voting power comparable to PIF and other institutional investors, they represent an important base of public ownership for SABIC.

Ownership Breakdown

To summarize, the ownership breakdown of SABIC shares is approximately as follows:

This illustrates how SABIC is majority owned by the Saudi government through PIF, with the remaining public float split between various institutional and individual investors locally and abroad.

Evolution of SABIC’s Ownership

SABIC’s ownership structure has evolved over the company’s history:

• 1976 – SABIC founded as a joint venture between the Saudi government and private sector interests.
• 1980 – Saudi government gains full ownership control.
• 1990s – Public share offerings increase private ownership to 49%.
• 2007 – Further share sales reduce government stake to 70%.
• 2020 – PIF consolidates government shares under its umbrella.

Initially founded with private sector participation, SABIC became fully nationalized in 1980. After pursuing partial privatization through public listings, the Saudi state retained a controlling 70% stake, now held by PIF. This demonstrates how SABIC remains strategically important for Saudi economic objectives.

Motivations of Major Shareholders

The motivations of SABIC’s major shareholders include:

Public Investment Fund

• Advancing Saudi Arabia’s economic diversification away from oil under Vision 2030
• Using SABIC’s expertise to develop domestic industries
• Generating returns to support PIF’s wider investment activities
• Supporting job creation and technology transfer to Saudi Arabia

As the sovereign wealth fund, PIF’s motivations center on advancing Saudi national economic priorities through its controlling SABIC stake.

Institutional Investors

• Earning investment returns for clients through share price gains and dividends
• Diversifying into emerging markets like Saudi Arabia for portfolio balancing
• Capitalizing on SABIC’s strong fundamentals and growth potential in chemicals

Institutional investors are focused on SABIC’s ability to generate risk-adjusted returns as part of diversified portfolios allocated across global markets.

Foreign Governments

• Strengthening economic ties between Saudi Arabia and their respective countries
• Cooperating with Saudi Arabia on energy and petrochemicals
• Locking in supply of key industrial inputs like plastics and fertilizers

Sovereign wealth funds from GCC countries invest in SABIC partly for strategic diplomatic and energy security objectives beyond pure financial returns.

Implications of Ownership Structure

SABIC’s ownership model has several implications:

• Saudi government control enables alignment with national development goals, but also increases political risk.
• Potential for conflicts between government shareholder priorities and profit maximization demanded by minority investors.
• Foreign state ownership creates useful international connections but may also expose SABIC to regional geopolitical issues.
• Public float and inclusion on Tadawul index improves liquidity and oversight.
• Financial interests of institutional shareholders generally favor strong corporate governance.

On balance, SABIC has a solid base of institutional and individual investors complementing the controlling government stake. But tensions between developmental and profitability objectives will need continual balancing by management.

Financial Performance and Shareholder Returns

Despite turbulence in energy and petrochemical markets, SABIC has remained financially resilient, generating steady returns for shareholders:

• SABIC has paid dividends every year since 2001, providing income to shareholders.
• Dividends per share have grown at a 5% CAGR over the past decade.
• The share price is up over 280% over the past 10 years, outpacing Tadawul index gains.
• Return on capital employed has averaged 12% over the past 5 years.

Prudent financial management and strong cash flows have enabled SABIC to provide consistent shareholder payouts and capital growth despite industry volatility.

SABIC Shareholder Relations

To engage with its diverse shareholder base, SABIC maintains an active investor relations function:

• Regular quarterly earnings calls and annual investor conferences.
• Publication of annual reports and sustainability reports.
• Company executives participate in investor meetings and conferences globally.
• Dedicated investor relations team handles shareholder queries.
• Up-to-date information provided through website and social media.

Through these efforts, SABIC provides transparency and access to all shareholders in line with best practices for investor relations.

Future Outlook for Shareholders

SABIC is well-positioned to continue creating value for shareholders given:

• Strategic alignment with Saudi Arabia’s economic transformation under Vision 2030.
• Growth opportunities in emerging markets for chemicals and plastics.
• SABIC’s strong balance sheet and prudent financial management.
• Potential for increased international expansion and joint ventures.
• Innovation in developing new hi-tech products.

Barring major global energy shocks or geopolitical turmoil, SABIC is likely to enhance shareholder returns through its industry leadership and connections to growth markets.

Conclusion

In summary, SABIC has a stable ownership structure dominated by the Saudi government’s 70% stake held through PIF. Other major shareholders include institutional investors seeking portfolio returns and foreign governments with strategic economic interests. This base of government, institutional and individual shareholders provides both long-term direction and financial accountability for SABIC. The company has performed well for its owners historically through consistent dividends and share price appreciation. SABIC is positioned for continued shareholder value creation supported by its industry prominence, technology investments and links to large emerging markets. Understanding the backgrounds and motivations of SABIC’s diverse owners provides helpful perspective on this important Saudi corporation.