Saudi sovereign wealth fund Public Investment Fund (PIF) has reached an agreement with Saudi Basic Industries Corporation (Sabic) to acquire a 100 per cent stake in Saudi Iron & Steel Company (Hadeed) in a deal worth SR12.5 billion ($3.3 billion), thus creating a national steel giant.

Under a cross-conditional share exchange agreement, Hadeed will also acquire a 100 per cent shareholding in Al Rajhi Steel Industries Company (Rajhi Steel) from Mohammed Abdulaziz Al Rajhi & Sons Investment Company (Rajhi Invest), in exchange for newly issued shares in Hadeed, the PIF said.

These transactions will allow Hadeed and Rajhi Steel to bring together their world-class steel plants and unrivalled leadership and experience in the steel industry in order to improve their respective production capabilities and to increase their operational efficiency, it stated.

According to PIF, the move is in line with the wealth fund’s broader efforts to accelerate Saudi Arabia’s industrial development, and will contribute to meeting the growing local demand for steel and improving Saudi Arabia’s steel production capabilities.

Furthermore, the transactions will contribute towards the growth of key downstream sectors, such as local construction, automotive, utilities, renewables, transport, and logistics, in line with Saudi Vision 2030.