World Economy

Saudi Fund to Buy Posco Stake

Saudi Fund to Buy Posco StakeSaudi Fund to Buy Posco Stake

South Korean steelmaker Posco is considering selling part of a stake in construction unit Posco Engineering & Construction to an unidentified Saudi Arabian fund in a deal worth nearly 1 trillion won ($966.28 million), said a senior official.

“The fund proposed the sale to help Posco E&C expand in Saudi Arabia,” the official told Reuters on condition of anonymity because the matter is confidential. The South Korean firm plans to sell about 30-40 percent stake in the construction unit to the unnamed Saudi Arabian sovereign wealth fund, local newspaper Korea Economic Daily reported, citing unnamed investment banking sources. The move comes as Posco E&C, in which the South Korean firm holds a 89.53 percent stake, plans to go public as part of the steelmaker’s efforts to bolster its balance sheet. POSCO (formerly Pohang Iron and Steel Company) is a multinational steel-making company headquartered in Pohang, South Korea. It had an output of 39.1 million tons of crude steel in 2011, making it the world’s fourth-largest steelmaker by this measure. In 2010, it was the world’s largest steel manufacturing company by market value. Also, in 2012, it was named as the 146th world’s largest corporations by the Fortune global 500. POSCO currently operates two integrated steel mills in South Korea, in Pohang and Gwangyang. In addition, POSCO operates a joint venture with US Steel, USS-POSCO, which is located in Pittsburg, California, United States.