The recent drop in the Royal Dutch Shell share price (LON:RDSB) has proved too irresistible for the Saudi Arabian Public Investment Fund (PIF), who have bought a stake in the London-listed oil major.
The Wall Street Journal broke news of the purchase of Shell shares by the Saudi Arabia wealth fund on Wednesday.
The Shell stake was among a tranche of investment in European oil companies that include Total, Eni, Equinor and Royal Dutch Shell.
The exact amount of the investment in Royal Dutch Shell shares is not know but it is thought a total of $1 billion was invested in Royal Dutch Shell, Total and Eni.
The PIF is reported to have taken a $200 million stake in Norwegian national oil company Equinor.
Shell share price
The $320 billion Saudi Arabian Public Investment Fund have taken advantage of a heavily reduced Shell share price that briefly sank as low as 895p intraday.
The wealth fund is viewing the sharp decrease in the price of European oil shares as an opportunity to bolster their holdings in the sector, focusing on those companies that have announced cost cutting measures.
Royal Dutch Shell were quick to announce a raft of measures to help preserve cash that included a reception to Capex and the scrapping of their share buyback programme.
The FTSE 100 oil company has not amended its ordinary dividend, however, which will make it an attractive proposition to investors.
Close watchers of Shell will note the face-ripping rally the Shell share price staged as it rallied through 1,000p, back up to to current levels around 1,480p. It is likely the Saudi wealth fund were major buyers during this period.
Diversification
The purchase of shares in European oil companies breaks with the PIF’s recent trend of diversifying away from oil.
Again stepping in the sweep up shares at knock-down prices, the PIF took a 8.2% in cruise line operator Carnival who has been ravaged by the spread of coronavirus, sending shares down over 75% from 2020 highs.
