Business and Investing Research On Emerging & Frontier Markets
SAUDI PUBLIC INVESTMENT FUND AIMS TO NEARLY DOUBLE ASSETS UNDER MANAGEMENT TO OVER $400 BILLION BY 2020
November 28, 2017
● Four key objectives are: maximizing PIF assets; launching new sectors; localizing advanced technologies and knowledge; and building strategic economic partnerships
● Six strategic investment pools have been defined, with four domestic-focused pools and two focused internationally
● Newly-established governance, risk and investment frameworks will underpin PIF’s activities as a world-leading sovereign wealth fund
Riyadh, 25 October, 2017 - The Public Investment Fund (PIF) Program (2018-2020) has today been launched as part of the Kingdom’s Vision 2030 Vision Realization Programs (VRP).
The PIF Program is one of twelve Vision Realization Programs, and acts as a roadmap for the next three years to strengthen PIF’s position as the engine behind economic diversification in the Kingdom. Furthermore, the Program underpins PIF’s role in supporting a crucial component of the Vision 2030 agenda, to transform Saudi Arabia into a global investment powerhouse.
The four key objectives underpinning the Program include growing and maximizing PIF assets; launching new sectors; localizing advanced technologies and knowledge; and building strategic economic partnerships.
Over the past two years, the PIF Board – chaired by HRH Prince Mohammad bin Salman Al-Saud, Crown Prince, Deputy Prime Minister, and Chairman of CEDA – has undertaken a wide range of actions to drive forward the transformation of PIF as it develops into one of the world’s leading and most impactful sovereign wealth funds. These activities include developing expertise and more than tripling the size of the Fund’s staff to around 200, whilst undertaking major reforms to the Fund’s investment, governance, legal, risk and compliance and finance functions.
The newly-launched PIF Program outlines how the Fund aims to complement private sector development in the Kingdom through its new domestic investment pools, split between the Fund’s Saudi Holdings, Saudi Sector Development, Saudi Real Estate & Infrastructure Development, and Saudi Giga-Projects pools.
The scale of ambition attached to the Fund’s domestic pools is evidenced by the announcement of the NEOM Project, the Red Sea Project, the Al Qidiya Project, as well as the establishment of nine companies focused on launching promising new sectors in the Kingdom, including the Saudi Arabian Military Industries company (SAMI), the Fund of Funds, and the Saudi Real Estate Refinancing Company.
The PIF Program, which is underpinned by 30 separate initiatives, will see the Fund’s AUM increase to SAR 1.5 trillion (over $400 billion) by 2020, creating 20,000 direct domestic jobs, more than half of which are high-skilled roles, and 256,000 construction jobs, which will increase PIF’s contribution to real GDP from 4.4 percent to 6.3 percent, and increase the share of local content to SAR 50 billion (over $13 billion). The Program also encompasses efforts to maximize value in PIF’s existing assets, which make up the majority of the Fund’s holdings, and a new target to increase PIF’s Total Shareholder Returns (TSR) up from 3 percent to between 4 to 5 percent.
The Fund’s International Strategic Investments pool will make PIF a leader and enabler in the future global economy and build the Kingdom’s international reputation as a partner of choice for global opportunities. PIF’s international assets will also be diversified through its International Diversified Pool portfolio, which will target investment in fixed-income, public equity, private equity and debt, real estate and infrastructure and other alternative investments, including hedge funds.
HRH Prince Mohammad bin Salman Al-Saud, said: “The PIF Program represents a vital milestone as we work towards realizing Vision 2030. As well as being recognized for being well-capitalized, the Fund also wants to be known as being well-run, transparent and well-governed, and the PIF Program will ensure this ambition is delivered.
At home, the PIF Program will unlock value in the domestic portfolio and drive forward strategic and sustainable diversification by creating opportunities in a range of different industries. Internationally, the Fund has begun to invest in some of the world’s most innovative companies and formed partnerships that will support long-term income diversification and ensure Saudi Arabia is at the forefront of emerging trends.”
The PIF Program (2018-2020) will be explored further over the remainder of the PIF-hosted Future Investment Initiative, which is bringing together global leaders, investors and innovators in Riyadh, Saudi Arabia, to explore the trends, opportunities and challenges shaping the investment landscape and world economy.