KSA- PIF acquires 38 of POSCO Engineering for 1.1bn

(MENAFN- Arab News) JEDDAH: The Public Investment Fund of Saudi Arabia (PIF) signed an agreement worth $1.1 billion to acquire 38 percent of the equity of Korean POSCO Engineering and Construction Company on June 15.
POSCO E&C is one of the leading global engineering and construction companies that specializes in engineering and building industrial and energy facilities infrastructure and urban development and has several international branches in emerging markets.
The agreement includes a commitment to proceed with strategic plans in Saudi Arabia such as the establishment of a Saudi joint venture company in the field of engineering and construction.
The engineering and construction sector is second only to the oil sector in respect of its financial contribution to the gross domestic product of Saudi Arabia. Recent studies suggest that the Kingdom plans to spend approximately $15 billion in the construction sector on strategic infrastructure projects this year which highlights the size of this sector and its importance in creating sustainable economic development.
The agreement was signed by Abdulrahman M. Al-Mofadhi secretary general of the Public Investment Fund and senior executive representatives of POSCO and POSCO Engineering and Construction Company in the presence of representatives of the PIF and other senior executives from POSCO Engineering and Construction Company and the parent company POSCO during a signing ceremony held at the headquarters of POSCO Engineering & Construction Company in Songdo Korea on June 15.
Al-Mofadhi said: "Signing the acquisition agreement is an important achievement that is in line with the Kingdom's plans and directions to transfer knowledge expertise and technology into Saudi Arabia. Also this transaction will lead to the development of projects that would achieve ambitious development goals domestically and enhance the economic status of the Kingdom. Furthermore the agreement will provide job opportunities for the local work force by creating a strong foundation for the training and development of young Saudis."
Al-Mofadhi added: "The parties commit to the establishment of the joint venture between the PIF and POSCO Engineering and Construction Company in Saudi Arabia in which PIF will hold a majority stake. This joint venture is likely to add value to the strong trade relations between the Kingdom and South Korea.'
He said the total volume of trade exchange between the two countries reached approximately $46.5 billion in 2013.
Al-Mofadhi noted that the engineering and construction industry is one of the most important factors for economic and social development in the developing countries.
'We are aware of the industry's strategic importance for the Kingdom and therefore we have planned to invest in this sector in order to respond to the local market needs for specialized engineering and construction services that are comparable with global standards' he added.
NCB Capital and JP Morgan acted as the financial advisers to the PIF on the transaction.