Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), intends to invest approximately USD 10 billion this year, according to a report by Bloomberg.
The report, which cited sources familiar with the matter, highlighted that investments will include e-commerce and renewable energy companies. PIF is seeking to more than double its assets to over USD 1.1 trillion by 2025.
USD 500 billion in assets
Chaired by Crown Prince Mohammed bin Salman, the PIF has amassed around USD 500 billion in assets, according to anonymous sources. The Fund received a $40 billion transfer from the Kingdom’s reserves in early 2020 when the COVID-19 pandemic affected global markets. The Fund invested in companies including Citigroup Inc., Facebook Inc. and cruise-ship operator Carnival Corp.
A lack of public information
Information on the PIF’s holdings comes from regulatory filings. Over a year ago, Governor Yasir Al Rumayyan said that the Fund intended for about 80% of its investments to be made in Saudi Arabia, with the remainder spent internationally.
A document outlining the Fund’s strategy for 2021-2025 stated that it seeks to “grow and diversify PIF’s international portfolio investments broadly, across geographies, asset classes and sectors, and away from the domestic economy and oil and gas industries.” The value of the PIF’s public holdings has reached nearly USD 200 billion, according to sources. Its largest investments are its stakes in Lucid Group Inc. and Saudi Telecom Co.
A shift in focus
The Fund has invested heavily in US-traded companies and during the third quarter of last year, its investments were valued at USD 43.4 billion. The Fund started to invest in video-game makers in 2021 and more recently added stakes in e-commerce, Chinese, and clean energy companies, from PayPal Holdings Inc. and Plug Power Inc. to Alibaba Group Holding Ltd.
In the past, Saudi Arabia’s excess oil revenue was mostly channelled by the Saudi central bank into stable liquid assets including US Treasuries.
According to sources, the Fund invested only about half of the $40 billion it planned to plow into the domestic economy last year, underscoring the difficulty for the Saudi economy to digest such vast sums.
The PIF is funded through borrowing, cash and asset transfers from the government, and retained earnings from its investments. While it has increased investment in US companies, its holdings in U.S. Treasuries have fallen to the lowest level in about approximately four years.
Saudi Arabia has been taking steps to digitalise its economy in recent years, including initiatives involving Aramco, Microsoft, Zain and others.
