business

Saudi Fund Buys $1.1 Billion Stake in Posco Engineering Unit

The Public Investment Fund of Saudi Arabia agreed to pay 1.24 trillion won ($1.1 billion) for a 38 percent stake in Posco’s engineering unit.

The agreement to buy the stake in Posco Engineering & Construction Co. will give the Saudi fund the right to appoint two board members, Posco, South Korea’s biggest steelmaker, said today in a statement. The Saudi fund will also benefit through the transfer of technology from Posco E&C.

The deal, nine months in the making, was first announced in March when the companies signed a memorandum of understanding.

Posco, formerly one of only four private firms in the nation with a AAA rating, said proceeds from the deal will used to improve the company’s capital structure and credit rating.

Posco also sold control of its specialty steel unit to a rival, Seah Besteel Corp, in December amid swelling competition from China and a drop in the price of iron ore.

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 petrochemical makers.

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