Posco in Talks to Sell Engineering Stake to Saudi FundDinesh Nair and Matthew Martin
Saudi Arabia’s Public Investment Fund (PIF) is in talks to buy a stake in South Korean steelmaker Posco’s engineering and construction unit as ties strengthen between the company and the state-backed investor.
Posco is still considering the sale, with a decision to be made in the first half of the year, according to a spokesman at the Posco Engineering & Construction Co. unit, who asked not to be identified according to company policy. He declined to comment on the size of the stake.
The Saudi state-run investment fund is seeking to buy as much as 40 percent of the unit, three people with knowledge of the matter said, asking not to be identified as the information is private. PIF is working with JP Morgan Chase & Co. and Saudi Arabia’s National Commercial Bank on the deal, they said.
A 40 percent stake is worth about $850 million based on the unit’s current market value, according to data compiled by Bloomberg. Saudi Arabia is allocating a record amount of money to build roads, industrial centers and airports as it seeks to cut its energy dependency and stimulate economic growth.
PIF is one of several investment bodies the kingdom uses to invest its oil wealth. The fund holds stakes in several listed Saudi companies, including Saudi Basic Industries Corp. one of the world’s biggest petrochemicals maker.
Posco E&C rose 1.6 percent as of 9:43 a.m. in Seoul, according to data from Freeboard, an over-the-counter market managed by the Korea Financial Investment Association. Its construction projects range from steel and power plants to harbors and skyscrapers, according to its website.
A spokeswoman for JPMorgan declined to comment, while representatives at National Commercial Bank weren’t immediately available to comment.