The sovereign wealth fund is headed by the crown prince of the kingdom, and its size reaches 47% of the country’s GDP.
Nearly 500 billion US dollars. It’s the size of the Public Investment Fund (PIF), a sovereign wealth fund in Saudi Arabia that made headlines this week after LIV Golf in that country raised a string of PGA athletes, in as world number two Cameron Smith and the Chilean Joaquín Niemann (19th).
Established in 1971 by decree under a royal decree issued by the Kingdom of Saudi Arabia, the fund is a strategic investor, 100% owned by Saudi Arabia, whose objective is to diversify the economy of the kingdom. and reduce its dependence on the hydrocarbon sector. The vehicle still receives contributions from the state, which in turn receives immense resources from the state-owned oil company Aramco: in 2021, its profits reached $110,000 million.
In this context, the PIF undertakes to invest US$10 billion over the next 10 years in the LIV Golf Series , betting on a revolutionary format, which seeks to change the conception and even, in some way, the rules of this sport. Additionally, the fund also recently bought 80% of the shares of Newcastle, of the English Premier League, for $400 million.
According to the latest ranking carried out in February by Moody’s, andThe size of the PIF is approximately US$500 billion, and “it continues to receive contributions from the Kingdom, both monetary and through asset transfers, and is one of the primary vehicles enabling the Kingdom to execute its Vision 2030. All members of the PIF board are appointed by royal decree and the board is chaired by Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince of Saudi Arabia.”
On the other hand, the last classification of Fitch, also in February, pointed out that the size of the fund would reach 47% of the country’s GDP by 2020.
By 2030, Saudi Arabia’s plan aims to grow fund assets; unlock new sectors in the kingdom; locate cutting-edge technology and knowledge; and forging strategic alliances at the national and international levels.
According to Moody’s, PIF’s portfolio is diversified across a different set of both domestic and international funds and investment opportunities. While local investments focus on maximizing the value of capital investments, invest in real estate and development, as well as megaprojects such as Neom. These represented 67% of the Fund’s assets under management in December 2020 . At the same time, in the overseas market, the fund “has a diversified portfolio of listed and unlisted investments, as well as international strategic investments which represented 33% of assets under management in December 2020”.
“As a key investment vehicle, the PIF is expected to play an important role in driving investment in green hydrogen and sustainability-based initiatives,” Fitch said in its latest ratings report.
The sovereign wealth fund is key in the kingdom’s strategy to reduce its carbon emissions to zero by 2060. In this context, it seeks to become the first vehicle of its kind to issue green bonds, for which it worked with BlackRock . Additionally, he has been mandated to develop almost 70% of the renewable projects in Saudi Arabia by 2030.
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