What was once a sleepy government holding company is now a vehicle for the global ambitions of Saudi Arabia under the plan known as “Vision 2030.”
The kingdom’s $600bn sovereign wealth fund is spreading around the oil-rich 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 $2tn in assets by 2030.
The fund’s main purpose is to stimulate inward investment, access new technologies, develop local industries and address widespread underemployment in the kingdom.
Saudi Arabia has attracted more than $9bn in investments in future technologies, including by US giants Microsoft and Oracle Corp, which are building cloud regions in the kingdom, a government minister said on Monday.
One focus of the PIF is tourism.
In a country that until recently was largely closed off to foreign holidaymakers, the PIF is investing in luxury resorts, cinemas and entertainment complexes to lure more tourists, and to stop Saudis from touring abroad.
Another is sports.
After buying struggling English Premier League soccer club Newcastle United in 2021, the 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.
The PIF is gradually reducing its legacy holdings in local businesses such as Saudi National Bank and Saudi Telecom Co to free up money for other investments. Those include national projects like Neom, a $500bn city-state that would run entirely on renewable power and export green energy.
Since 2016, when it committed $45bn to SoftBank Group Corp’s technology-focused Vision Fund, the PIF’s foreign interests have also mushroomed.
An investment in electric carmaker Lucid Motors has increased in value to almost $10bn and the company is opening a factory in Saudi Arabia.
The fund also has stakes in video game makers Activision Blizzard and Electronic Arts, as well as the digital services and retail businesses of Asia’s richest man, Mukesh Ambani.
While traditional sovereign funds invest excess national wealth to generate profits in the future, the 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.
The PIF’s assets have almost quadrupled since 2015 to over $600bn. Crown Prince Mohamed bin Salman wants it to be overseeing assets of $2tn by 2030, which would make it bigger that Norway’s sovereign fund, currently the world’s largest at about $1.4tn.
For sure, the PIF’s larger plans are forward-looking. The fund plans to invest $24bn in Middle Eastern and North African countries as the kingdom seeks to bolster regional economies.
The fund plans to invest more than $10bn by 2026 in eligible green projects, including renewable energy, according to an investor presentation for the bonds sold in October.
The fund is also expanding its team in New York to manage a growing portfolio of US stocks.
In a wider sense, policy makers in every Gulf country now know for sure the oil windfall the region has been accustomed to cannot be taken for granted in the long term.
And Saudi Arabia’s bold economic overhaul, championed by Prince Mohamed, bodes well for the kingdom’s non-oil future.
Whether the PIF’s ambitious investments plans could earn a big return is beside the point. The fund’s ultimate goal is to diversify the kingdom’s oil-reliant economy and project Saudi influence around the world.