In 2022, Saudi Arabia’s Public Investment Fund (PIF) rose to the fifth position among the largest sovereign funds in the world for the first time, with assets valued at roughly $620 bn.
The fund’s share of global sovereign wealth increased to 6.2 percent, up from 5.9 percent, according to data from the Sovereign Wealth Fund Institute.
What is Saudi Arabia’s PIF?
Saudi Arabia’s PIF initially took shape in 1971. Designed as a governmental savings account, it was primarily financed through oil revenue. The fund essentially served as the government’s savings deposit, enabling it to channel funds into diverse investments.
It distributes its assets under management (AUM) both domestically and internationally. It specifically allocates 23 percent of its assets to international ventures and dedicates 68 percent to domestic projects.
Meanwhile, the remaining section is directed towards the Treasury. Furthermore, a significant portion of these assets, 83 percent, are managed internally. Conversely, external entities handle the remaining 17 percent.
Saudi Arabia’s PIF has been a substantial driver of the kingdom’s economic diversification strategy. It has made significant investments in sectors such as technology, entertainment, tourism, and renewable energy, among others.
Saudi PIF’s biggest investments by value
Saudi Aramco
Asserting its dominance in traditional sectors, Saudi Arabia’s PIF holds a considerable 8 percent stake in the oil giant, Saudi Aramco, valued at an impressive $2.2 tn. The PIF gained control over this stake, worth approximately $180 bn, in 2022 and early 2023.
Saudi National Bank
Meanwhile, with regard to the banking sector, we see the Saudi PIF investing significantly in the Saudi National Bank. Here, it has committed $53 bn, underscoring its diversified investment approach.
Read: The PIF: A catalyst for Saudi’s economic transformation
Saudi Telecom Company
In the telecom sector, the Saudi Arabia PIF has a colossal stake in the Saudi Telecom Company. As the Kingdom’s largest telecom entity, it dominates in terms of market share and other essential metrics. Specifically, the PIF has a significant stake in this company by investing $51 bn.
SoftBank Group
Likewise, Saudi PIF stepped into technology funding, marking its entry as the lead investor in the world’s largest technology fund, SoftBank Vision Fund. Pursuing this strategic investment avenue, the PIF is considering contributing a substantial $45 bn to the fund over the next five years.
NEOM Project
Under the Crown Prince’s leadership, the Saudi Arabia PIF has recognized the vital role technology plays in shaping the future and has aggressively invested in this area. Particularly, the Saudi PIF allotted 5 percent of its assets for giga-projects like the ambitious $500 bn NEOM project. This 110-mile-long linear smart city paints a high-tech, futuristic vision of urban planning.
Targets of Saudi Arabia’s PIF by 2025
- Doubling AUM: Saudi’s PIF aims to enhance its AUM to reach $1.07 tn, effectively doubling its current size to make a stronger impact on the kingdom’s economy.
- Job creation: Additionally, it has set a target of generating 1.8 mn jobs, both directly and indirectly. These employment opportunities will be created through various investments in diverse sectors.
- Enhanced focus on strategic sectors: The Saudi PIF plans to concentrate its efforts on several key strategic sectors in order to catalyze economic growth and diversification.
- Local economy investment: Similarly, it intends to invest a minimum of $40 bn annually in the local economy. Consequently, this investment will boost domestic economic activity and facilitate growth.
- Non-oil GDP contribution: More so, Saudi PIF has set a target of contributing $320 bn to the non-oil GDP.
- Boost local content contribution: The PIF likewise aims to increase the local content contribution to 60 percent within its own and its portfolio companies.
The road ahead
As the fund continues to channel resources into a range of sectors, it is set to play a vital role in transforming Saudi Arabia into an economy that moves beyond oil. The Saudi Arabia PIF exemplifies strategic resource allocation to set the course for a prosperous nation.
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