By Stephen Kalin 

RIYADH, Saudi Arabia -- The central bank here transferred $40 billion to the kingdom's wealth fund, the Saudi finance minister said, as the state-owned investor picked up minority stakes in American corporates amid the financial fallout of the coronavirus pandemic.

"We are in a very unusual time. This is a very exceptional one-off transaction that came after a lot of deliberation," Finance Minister Mohammed al-Jadaan told The Wall Street Journal late Friday by telephone.

"It was decided that possibly this is an opportunity that we should not waste," he said.

The $300 billion Public Investment Fund in the first quarter bought roughly half a billion dollar stakes in each of Facebook Inc., Walt Disney Co. and Marriott International Inc., according to a U.S. regulatory filing earlier this month. It also acquired shares worth a similar amount in Cisco Systems Inc., Citigroup Inc., Bank of America Corp., Carnival Corp. and Live Nation Entertainment Inc. It bought a stake worth $714 million in Boeing Co.

Mr. Jadaan, who sits on PIF's board, said $15 billion was transferred to the wealth fund in March and about $25 billion in April.

As a result, Mr. Jadaan said, Saudi foreign reserves dropped by $50 billion over March and April. He attributed the remaining drop in reserves to "normal monthly fluctuation."

All the funds have been transferred, but only some have been spent, he said. "They will be looking for the right time in the right market in the right asset, so they have still some but they are still looking for good assets to acquire."

Crown Prince Mohammed bin Salman, the kingdom's day-to-day ruler and PIF's chairman, tasked the sovereign-wealth fund in 2015 with diversifying the country's economy away from oil by investing in companies and industries untethered to hydrocarbons. PIF's recent buying spree highlights a bold strategy of piling into global stocks even as the novel coronavirus and a crash in oil prices mean that Saudi Arabia's financial position is now the most precarious in a decade.

Earlier this month, the Saudi government tripled its value-added tax rate and cut subsidies to state employees as it contends with lower oil revenue and an economy weakening under coronavirus lockdown. The authorities began easing the restrictions this week as new daily infections in the kingdom slowed.

Lower oil revenues mean the world's top oil exporter will likely have to further draw down from foreign reserves this year, borrow billions of dollars more and also cut spending on the crown prince's signature projects to bolster its oil-dependent state finances. The kingdom's budget deficit is expected to balloon to nearly 13% of output.

Mr. Jadaan rebuffed concerns that lowering the country's foreign reserves risked putting pressure on the Saudi riyal, which is pegged to the U.S. dollar.

"No, not at all. I think it's a very well-calculated move," he said, but added he didn't expect it to happen again.

Saudi Arabia's reserves fell by $27 billion in March -- the largest single-month drop going back two decades. Mr. Jadaan said April would see another $24 billion decrease, which would leave the Saudi central bank with about $455 billion.

While PIF has dipped into stocks in recent years, the fund has focused more on private equity, allocating capital to managers such as SoftBank Group Corp. Its record is mixed. PIF's $45 billion investment in the Vision Fund has suffered losses and the value of its pre-listing investment in Uber Technologies Inc. of $3.5 billion is also currently down.

The wealth fund's spending comes months after Saudi Arabia listed national oil company Aramco, helping raise nearly $30 billion for the fund to deploy. But PIF is also facing a lower windfall from the sale of the kingdom's national petrochemical company to Aramco, a transaction previously valued at $69 billion that the two sides are renegotiating to a lower price.

Write to Stephen Kalin at stephen.kalin@wsj.com

(END) Dow Jones Newswires

May 29, 2020 19:36 ET (23:36 GMT)