South Korean steel maker POSCO is considering selling part of its stake in construction unit POSCO Engineering & Construction to an unidentified Saudi Arabian fund, a POSCO official said on Monday.

"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.

POSCO is considering selling about 30 percent to 40 percent stake in POSCO E&C to an unnamed Saudi Arabian sovereign wealth fund, with the stake's value expected to be near 1 trillion won ($966.28 million), local newspaper Korea Economic Daily reported, citing unnamed investment banking sources.

The move comes as POSCO E&C, in which POSCO holds a 89.53 percent stake, plans to go public as part of the steel maker's efforts to bolster its balance sheet.