Saudi Arabia’s $600B Fund – Building a Post-Oil Future

As the availability of wealthy investors diminishes globally, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, is distributing its resources more widely than ever before. With a current value of $600 billion, the fund has acquired sports teams and electric vehicle manufacturers, as well as financed the development of new cities in the desert, all to accumulate $2 trillion in assets by 2030. The ultimate aim of this strategy is to diversify the Saudi economy, which currently relies heavily on oil, and expand the nation’s influence globally.

Vision 2030: PIF’s New Role in Global Ambitions

Under a plan known as Vision 2030, PIF now serves as a means for Crown Prince Mohammed Bin Salman to achieve the global aspirations of the country. The primary goal is to attract foreign investment, acquire advanced technologies, and cultivate local businesses. A particular area of focus is tourism – PIF is investing in high-end resorts, movie theaters, and recreational centers to attract more visitors. The fund is also increasing its staff in New York to oversee its expanding collection of US stocks.

PIF’s Investment Goals

The Public Investment Fund (PIF) is actively working to decrease its investments in traditional local businesses, such as the Saudi National Bank and Saudi Telecom Company, to allocate funds toward new ventures. These ventures include ambitious projects such as Neom, a $500 billion city that operates solely on sustainable energy and exports clean power. Since 2016, PIF has also significantly expanded its foreign investments, including a $45 billion investment in SoftBank’s technology-focused Vision Fund. PIF’s investment in electric car manufacturer Lucid Motors has grown to nearly $10 billion, and the company is now building a factory in Saudi Arabia. Additionally, the fund holds stakes in video game developers Activision Blizzard and Electronic Arts, as well as digital services and retail ventures belonging to Asia’s wealthiest man, Mukesh Ambani.

PIF’s Approach to Investment

Unlike traditional sovereign funds, which save excess national wealth for future profits, PIF was repurposed as a global investor while the Saudi budget was in deficit. To achieve growth targets, PIF has resorted to borrowing and investing heavily in development projects at home. PIF has obtained multi-billion dollar loans from global banks, and in 2022 raised $3 billion from its debut green bond sale. PIF is the primary funding source for most of the kingdom’s renewable energy investments. Through Neom, PIF is funding one of the world’s most significant projects to produce hydrogen fuel without harmful emissions.

PIF’s Growth Targets

Since 2015, the assets of the fund have grown fourfold to reach over $600 billion. Prince Mohammed aims for the fund to manage assets worth $2 trillion by 2030, surpassing Norway’s sovereign fund, which currently holds around $1.4 trillion. To reach this goal, the fund will continue to receive large transfers of assets from the state. Additionally, the fund has been significantly impacted by the transfer of undeveloped land, which holds no value on paper. However, if developed, the land can greatly increase in value.

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