Mohammed bin Salman. Picture: SUPPLIED
Mohammed bin Salman. Picture: SUPPLIED

Dhahran, Saudi Arabia/Dubai — Saudi Aramco has created a subsidiary to house its multibillion-dollar pension fund and could spin off its aviation division as it restructures some assets not related to oil and gas ahead of its planned initial public offering (IPO), sources said.

The aim is to streamline Aramco’s operations, which could make it easier to value since its business risk would be clearer and that may help it achieve a higher price for its shares, financial and industry sources said.

"This makes Aramco a leaner company," said one source familiar with Aramco’s plans.

The state-owned oil giant declined to comment.

The listing of Aramco, which is likely to happen in 2019, is the centrepiece of the government’s ambitious Vision 2030 plan to diversify the kingdom’s economy beyond oil.

Crown Prince Mohammed bin Salman expects the IPO to value Aramco at a minimum of $2-trillion, meaning a sale of 5% could raise $100bn to help fund Vision 2030 projects.

Analysts have valued Aramco at between $1-trillion and $1.5-trillion.

Saudi Arabia has often tasked Aramco with carrying out government projects that have social goals and are too big or daunting for the private sector, such as building industrial cities, stadiums and cultural centres.

Aramco has its own schools, housing, airline fleet and hospitals, which are used by its roughly 55,000 employees and their families. But potential investors may not want exposure to such a complicated array of assets, which would not be as profitable as Aramco’s core oil business, financial sources said.

About six months ago Aramco created a subsidiary for its in-house multibillion-dollar retirement fund management unit, now called Wisayah, sources said.