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Saudi Arabia’s sovereign wealth fund’s latest move shows its growing influence over the Arab world’s largest economy. The Public Investment Fund (PIF), which is responsible for most of the country’s diversification projects, including developing an auto-manufacturing hub and tourism projects, will now  acquire 100% of the Saudi Iron and Steel Co, known as Hadeed, from the Saudi Basic Industries Corp (SABIC.)

SABIC revealed that the transaction is valued at $3.33 billion and aligns with the PIF’s overall efforts to boost industrial development throughout the kingdom while simultaneously improving steel production in Saudi.

In a separate deal, SABIC’s steel unit Hadeed will acquire AlRajhi Steel Industries Co. in exchange for stock, according to a statement. The deal is expected to close before the end of the first quarter of 2024, and the final sale price will only be finalized then. 

“The steel industry is foundational to the Saudi economy and its diversification and growth. These transactions will bring together PIF’s financial capabilities and industry experience with Hadeed and Rajhi Steel’s leading technical and commercial expertise to create a national champion in Saudi Arabia’s steel sector,” said Yazeed A. Al-Humeid, deputy governor and head of PIF’s Middle East and North Africa investments.

Abdulrahman Al-Fageeh, SABIC CEO, said the transaction will push Hadeed to position itself as one of the most significant iron and steel companies within the GCC. “The sale will enable SABIC to focus meanwhile on its strategy to become the preferred world leader in chemicals,” he added.

Hadeed manufactures steel products ranging from reinforced bars, coiled wires and billets, and hot and cold rolled coils.