In a world where deep-pocketed investors are becoming harder to find, Saudi Arabia’s $600 billion sovereign wealth fund is spreading around the kingdom’s largesse as never before. The Public Investment Fund has snapped up sports teams and electric carmakers and funded new cities in the desert as it seeks to amass $2 trillion in assets by 2030. The fund’s ultimate goal is to diversify the kingdom’s oil-reliant economy and project Saudi influence around the world.
How has the fund’s purpose changed?
PIF is now a vehicle for the global ambitions of the country’s ruler, Crown Prince Mohammed Bin Salman, under a plan known as Vision 2030. Its main purpose is to stimulate inward investment, access new technologies, and develop local industries. One focus is tourism: PIF is investing in luxury resorts, cinemas and entertainment complexes to lure more tourists. The fund is expanding its team in New York to manage a growing portfolio of US stocks.
What does the PIF invest in?
It’s gradually reducing its legacy holdings in local businesses such as Saudi National Bank (SNB) and Saudi Telecom Co. (STC) to free up money for other investments. Those include national projects like Neom, a $500-billion city-state that would run entirely on renewable power and export green energy. Since 2016, when it committed $45 billion to SoftBank Group Corp.’s technology-focused Vision Fund, PIF’s foreign interests have also mushroomed. An investment in electric carmaker Lucid Motors Inc. has increased in value to almost $10 billion and the company is opening a factory in Saudi Arabia. The fund has stakes in video game makers Activision Blizzard Inc. (ATVI) and Electronic Arts Inc. (EA) and the digital services and retail businesses of Asia’s richest man, Mukesh Ambani.
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What makes the PIF uncommon?
While traditional sovereign funds invest excess national wealth to generate profits in the future, PIF was repurposed as a global investor while the Saudi budget was in deficit. As a result, it’s also turned to borrowing in order to hit its growth targets, which will require it to spend prolifically on development projects at home. It’s already tapped global banks for multi-billion-dollar loans. In 2022, it raised $3 billion from its debut green bond sale. The PIF is the main backer of most of the kingdom’s renewable energy investments. Through Neom, it’s funding one of the world’s largest projects to produce hydrogen fuel without creating any harmful emissions.
How big does PIF want to be?
Its assets have almost quadrupled since 2015 to over $600 billion. Prince Mohammed wants it to be overseeing assets of $2 trillion by 2030, which would make it bigger that Norway’s sovereign fund, currently the world’s largest at about $1.4 trillion. The path to $2 trillion will involve more big asset transfers from the state. The fund has also been a major recipient of undeveloped land that’s worth zero on paper. If it’s used for building, its value can soar.
What are the PIF’s ambitions in sport?
After buying English Premier League soccer club Newcastle United in 2021, PIF decided to back LIV Golf, an attempt to build a rival tournament to the PGA. It also considered making a bid for Formula 1 motor racing in late 2022. PIF’s investments in sports and competitive gaming and moves to bring major sporting events — and stars like Cristiano Ronaldo — to the kingdom are partly an attempt to boost Saudi soft power.