DUBAI, UAE: SABIC, a global petrochemical giant, announced on Sunday that it had reached an agreement to sell its steel-making subsidiary Hadeed to the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, for $3.33 billion.

The deal, which is expected to be finalized by the first quarter of 2024, will help SABIC to focus on its core chemical business and use the proceeds to support its growth in the industry, the company said in a statement to the stock exchange. The exact sale price will be revealed closer to the closing date.

SABIC suffered a huge drop in its net profit in the second quarter due to lower sales prices and weaker demand. It said that selling Hadeed was part of its strategy to concentrate on its main businesses.

The sale of Hadeed, a leading producer of steel products, will result in a non-cash loss of between $533 million and $667 million in SABIC’s third-quarter earnings, the company said. The fair value of Hadeed’s net assets was lower than their book value.

Hadeed has played a major role in building Saudi Arabia’s large infrastructure projects, which are essential for its economic diversification plan known as Vision 2030. The PIF is the main driver of this plan.

In a separate announcement on Sunday, the PIF said that it had sold its 10.9% stake in National Gas and Industrialization Company for $131 million through a private share sale. Jadwa Investment Company bought the stake for its managed investment funds and clients, according to a statement on the stock exchange. The transaction is expected to be completed by Sept. 5.