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Public Investment Fund
Founded1971; 53 years ago (1971)
Headquarters
Riyadh
,
Saudi Arabia
Key people
Crown Prince Mohammad bin Salman (Chairman) H.E. Yasir bin Othman Al-Rumayyan (Managing Director)
AUM$320 billion [1]
Websitewww.pif.gov.sa

The Public Investment Fund (PIF) is the sovereign wealth fund of Saudi Arabia. It is among the largest sovereign wealth funds in the world with total estimated assets of $320 billion.[2][3] PIF has a portfolio made up of approximately 200 investments, of which around 20 are listed on Tadawul, the Saudi Stock Exchange.

Established in 1971, PIF’s role has expanded to invest in a range of non-oil sectors within and outside Saudi Arabia, with the aim of encouraging domestic private sector development in support of the Saudi Vision 2030 program. As of September 2017 the PIF has $230 billion in assets under management.[4]

Initiatives financed by PIF within Saudi Arabia include projects to develop tourist destinations on the Red Sea coast; the development of the Kingdom’s entertainment sector; and Neom, a $500 billion independent economic zone focused on high-tech industries.

Role

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The Public Investment Fund invests through equity, loans or guarantees, and allocations of public funds to specific projects. PIF also provides medium and long-term loans to large-scale government and private industrial projects. PIF invests in the fields of telecoms, aerospace, energy, green technologies, and security, with a focus on housing finance, renewable energy and information technology.[5]

In October 2017, the Public Investment Fund Program (2018–2020) was launched as one of Saudi Arabia’s 12 Vision Realization Programs (VRPs), designed to achieve the goals of Saudi Vision 2030.[6] The PIF Program prioritizes ‘gigaprojects’ (projects costing more than $10 billion), real estate and infrastructure projects, and the development of the Saudi private sector, with assets under management set to increase to more than $400 billion by 2020. Among the program’s goals are to create 20,000 direct domestic jobs and 256,000 construction jobs.[7][6]

As part of the program, PIF structures its investments in six areas: Saudi equity holdings, sector development, real estate and infrastructure, mega projects, international strategic investments and a “diversified pool” across global asset classes. Its four major sources of funding for these include capital injections from the government, government asset transfers, loans and debt instruments, and retained earnings from investments.[8]

History

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The Public Investment Fund was established in 1971 by Royal Decree M/24 to provide financing support for projects of strategic significance to the national economy.[9] In 1974, PIF’s mandate was further expanded to invest in and manage equity holdings in joint stock companies on behalf of the government.[10]

Since its inception, PIF has been the Kingdom’s main investment arm, and has played an important role in the financing of vital projects in the Kingdom, including in the oil refining, fertilizer, petrochemical and electricity sectors.[11]

Yasir bin Othman Al-Rumayyan, Managing Director of PIF

In July 2014, the Council of Ministers granted PIF authority to fund new companies inside and outside the Kingdom, either independently or in cooperation with the public and private sectors, without the council's prior approval.[11]

In March 2015, oversight of PIF was moved from the Ministry of Finance to the Council of Economic and Development Affairs (CEDA), with a new board chaired by HRH the Crown Prince Mohammad bin Salman Al Saud.[12] In September 2015, H.E. Mr. Yasir bin Othman Al-Rumayyan was appointed as Secretary-General of the Board, and Managing Director.[5]

Following these changes, the board moved to refine PIF’s investment capabilities to enable it to manage a broader portfolio of current and new assets, in line with the government’s Vision 2030.[13][14] The aim is to diversify government resources and the economy, and to help unlock strategic sectors.[15]

Investment projects

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Beginning in 2015, PIF began making a number of high-profile investments, including acquiring a 38% stake in South Korea’s Posco Engineering & Construction Co in July that year before signing an agreement the following October to invest $2 billion in French private funds focused on renewable energy and small and medium industries.[16][17] In June 2016, it was announced that PIF was acquiring an approximate 5 percent stake in Uber for an investment of $3.5 billion.[18] In October 2016, Japanese firm SoftBank announced it had signed a memorandum of understanding with PIF for the establishment of a London-based SoftBank Vision Fund, which aims to invest up to $45 billion in the tech sector over five years.[19]

In March 2016, it was announced that ownership of Saudi Aramco would be transferred to PIF and that the Kingdom would seek to list 5 percent of Aramco’s shares. PIF expects to become the largest sovereign wealth fund in the world with assets of $2 trillion.[20]

In April 2017, a project was announced to build a 334-square kilometer entertainment resort in Qiddiya, southwest of Riyadh, with PIF as the main investor.[21] Ground-breaking at Qiddiya began a year later, together with an agreement between PIF and Six Flags to develop a Six Flags-branded theme park at the resort.[22][23][24]

At the Saudi-US CEO Forum in May 2017, part of President Donald Trump's official trip to Saudi Arabia, PIF entered into a non-binding memorandum with the US private equity firm Blackstone to invest in a $40 billion joint infrastructure fund.[25] Later that year PIF committed to contributing $20 billion to the fund, mostly for projects in the US.[26] During the same forum a $6 billion deal was announced between Lockheed Martin and PIF-owned Saudi Technology Development and Investment Company (Taqnia) to assemble 150 Black Hawk helicopters in Saudi Arabia.[27]

In July 2017, PIF announced that it would lead The Red Sea Project – a series of resorts across 50 islands on the Red Sea coast – as part of a wider move to attract international investment in Saudi Arabia’s tourism and hospitality sectors.[28] At the PIF-hosted Future Investment Initiative conference in October 2017 it was announced that PIF would be among the backers of Neom, a $500 billion, 26,000-square kilometer economic zone on Saudi Arabia’s Red Sea coast aimed at developing sectors including renewable energy, biotechnology, robotics and advanced manufacturing.[29][30] The closed joint-stock Neom Company was set up in January 2019 as a fully owned PIF subsidiary to develop Neom.[31]

In February 2018, PIF partnered with Singapore firm GIC to acquire a majority stake of AccorInvest, the real estate arm of French hotelier Accor.[32] The following month, the fund invested $400m in Magic Leap, a US developer of mixed reality headsets.[33]

A further agreement between PIF and SoftBank followed in March 2018 to fund the Saudi-based New Solar Energy Plan 2030, the largest solar power project of its type in the world, with a planned 200GW capacity by 2030.[34]

In April 2018, the Development and Investment Entertainment Company (DIEC), established by PIF in January that year, signed a deal with AMC Theaters to develop 30–40 cinemas in the Kingdom over the following five years.[35] In May that year it was announced that the DIEC would oversee the development of around 20 large-scale entertainment centers throughout the country, including cinemas, restaurants, public performances and retail space.[36]

In September 2018, PIF agreed to invest more than $1 billion in electric carmaker Lucid Motors.[37] It also announced it would provide initial funding for the Amaala resort, a tourist destination in the northwest of Saudi Arabia.[38] In November 2018, PIF announced the launch of the Wadi Al Disah Development Project, a sustainable tourism location within the Prince Mohammed bin Salman Natural Reserve.[39]

In January 2019, it was announced that PIF and its partners would develop 70% of Saudi Arabia’s total planned renewable energy capacity.[40] In March the same year PIF established Saudi Arabia’s first commercial helicopter operator, offering private transport within major cities and tourist trips to other areas of the Kingdom.[41] In the same month it was reported that PIF had hired New York communications firm Karv Communications to create a clear distinction with the Kingdom’s political leadership following the assassination of Jamal Khashoggi.[42] Also in March 2019, PIF sold its 70% stake in the state petrochemical firm SABIC to Saudi Aramco for $69.1 billion.[43]

See also

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References

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  1. ^ "Public Investment Fund (PIF) - Sovereign Wealth Fund, Saudi Arabia - SWFI". www.swfinstitute.org. Retrieved 2019-05-05.
  2. ^ "Top 81 Largest Sovereign Wealth Fund Rankings by Total Assets - SWFI". www.swfinstitute.org. Retrieved 2019-05-05.
  3. ^ "Public Investment Fund (PIF) - Sovereign Wealth Fund, Saudi Arabia - SWFI". www.swfinstitute.org. Retrieved 2019-05-05.
  4. ^ "PIF Program" (PDF). www.pif.gov.sa. Retrieved 14 February 2019.
  5. ^ a b "Company Overview of Public Investment Fund". Bloomberg.
  6. ^ a b Massoud Derhally (25 October 2017). "Saudi fund's assets under management to top $400bn by 2020". The National. Retrieved 25 February 2019.
  7. ^ Damien Balmet (23 January 2019). "Why sovereign wealth funds are adding economic development to their mandates". The National. Retrieved 25 February 2019.
  8. ^ Katie Paul (25 October 2017). "Eyeing $400 billion, Saudi wealth fund aims to nearly double size by 2020". Reuters. Retrieved 25 February 2019.
  9. ^ "Public Investment Fund System". www.boe.gov.sa. Retrieved 2 December 2016.
  10. ^ "Interview transcript: Mansour al-Maiman". Financial Times. 28 April 2008. Retrieved 26 February 2019.
  11. ^ a b Rami Khrais. "Saudis refine blueprint for post-oil economy". Al Monitor. Retrieved 26 February 2019.
  12. ^ Richard Thompson (23 November 2017). "New Saudi Arabian giant emerges". Retrieved 26 February 2019.
  13. ^ "How to achieve our vision". vision2030.gov.sa/.
  14. ^ Simon Kerr (9 May 2016). "The Saudi Reshuffle: five key reforms in Riyadh". Financial Times. Retrieved 26 February 2019.
  15. ^ "Full text of Saudi Arabia's Vision 2030". Al Arabiya. 26 April 2016. Retrieved 26 February 2019.
  16. ^ Stephen Stapczynski (2 July 2015). "Saudi Fund Buys $1.1 Billion Stake in Posco Engineering Unit". Bloomberg. Retrieved 26 February 2019.
  17. ^ Nafisa Eltahir; Tuqa Khallid (16 October 2018). "Saudi sovereign fund's investments abroad". Reuters. Retrieved 5 May 2019.
  18. ^ "Uber attracts $3.5bn from Saudi Public Investment Fund". BBC. 2 June 2016. Retrieved 26 February 2019.
  19. ^ Natasha Lomas (14 October 2016). "Softbank and Saudi Arabia's PIF planning $100BN tech fund". TechCrunch. Retrieved 26 February 2019.
  20. ^ Mark Fahey (8 April 2016). "The Aramco investment plan, by the numbers". CNBC. Retrieved 26 February 2019.
  21. ^ "Prince Mohammed bin Salman announces Saudi plans for largest entertainment city". Al Arabiya. Retrieved 26 February 2019.
  22. ^ Stephen Kalin; Marwa Rashad (28 April 2018). "Saudi Arabia launches multi-billion dollar entertainment resort". Reuters. Retrieved 26 February 2019.
  23. ^ "Six Flags theme park coming to Saudi Arabia in 2022". Arabian Business. 5 April 2018. Retrieved 26 February 2019.
  24. ^ "BRIEF-Public Investment Fund Announces Agreement With Six Flags". Reuters. 6 April 2018. Retrieved 26 February 2019.
  25. ^ Julia Manchester (20 May 2017). "Blackstone, Saudis set to invest $40 billion in primarily U.S. infrastructure". The Hill. Retrieved 26 February 2019.
  26. ^ "Saudi's PIF commits $20 bln to $40 billion fund with Blackstone". Reuters. 24 October 2017. Retrieved 26 February 2019.
  27. ^ "Saudi-US arms deal includes plans for 150 Lockheed Martin Black Hawk helicopters". Arab News. Riyadh, Saudi Arabia. May 20, 2017. Retrieved May 20, 2017.
  28. ^ Rob Hodgetts (4 August 2017). "Saudi Arabia launches luxury Red Sea beach resorts plan". CNN. Retrieved 26 February 2019.
  29. ^ Sarmad Khan (24 October 2017). "Saudi Arabia unveils $500bn investment zone spanning three countries". The National. Retrieved 26 February 2019.
  30. ^ Glen Carey; Vivian Nereim; Christopher Cannon (26 October 2017). "Sun, sea and robots: Saudi Arabia's sci-fi city in the desert". Bloomberg. Retrieved 26 February 2019.
  31. ^ "Saudi Arabia announces creation of Neom Company". Arab News. 2019-01-29. Retrieved 2019-01-29.
  32. ^ Harriet Agnew (27 February 2018). "Accor seals sale of majority stake in real estate arm". Financial Times. Retrieved 26 February 2019.
  33. ^ Steve Rosenbush (8 March 2018). "The Morning Download: Hiring Is the CIO's Top Concern, WSJ Snap Poll Shows". The Wall Street Journal. Retrieved 26 February 2019.
  34. ^ Davide Barbuscia; Tom Arnold (14 May 2018). "SoftBank, PIF in early funding talks with banks on huge solar project – sources". Reuters. Retrieved 26 February 2019.
  35. ^ "BRIEF-Saudi Arabia's Public Investment Fund's Unit Signs Agreement With AMC". Reuters. 4 April 2018. Retrieved 26 February 2019.
  36. ^ Andrew Torchia (6 May 2018). "Saudi sovereign fund plans entertainment centers across kingdom". Reuters. Retrieved 26 February 2019.
  37. ^ Tom Arnold (27 September 2018). "Saudi's PIF invests more than $1 billion in electric carmaker Lucid Motors". Reuters. Retrieved 26 February 2019.
  38. ^ "Saudi Arabia's PIF unveils Amaala, a new global leading destination for wellness". Arab News. 30 September 2018. Retrieved 26 February 2019.
  39. ^ "PIF Announces "Wadi Al Disah Development Project" in Mohammed bin Salman Natural Reserve". Business Standard. 22 November 2018. Retrieved 26 February 2019.
  40. ^ Rania El Gamal; Stanley Carvalho (15 January 2019). "Saudi Arabia sees domestic energy use falling, plans renewables push". Reuters. Retrieved 26 February 2019.
  41. ^ "Saudi Arabia's Public Investment Fund establishes helicopter operator". Reuters. 11 March 2019. Retrieved 18 March 2019.
  42. ^ Saudi Arabia fund hires PR firm in the wake of Khashoggi murder, Andrew England, March 19, 2019, Financial Times
  43. ^ Tom DiChristopher (27 March 2019). "Saudi Aramco reaches $69.1 billion deal to buy majority stake in petrochemicals firm Sabic". CNBC. Retrieved 5 May 2019.
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Category:1971 establishments in Saudi Arabia Category:Business organisations based in Saudi Arabia Category:Sovereign wealth funds

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