Public Investment Fund of Saudi Arabia
The Public Investment Fund is the sovereign wealth fund of Saudi Arabia. It is among the largest sovereign wealth funds in the world with total estimated assets of $382 billion. It was founded for the purpose of investing funds on behalf of the Government of Saudi Arabia. Saudi Arabia aims at transferring the PIF from a mere local authority to the largest sovereign fund in the world. Thus, PIF is working on managing assets worth $400 billion by 2020. The PIF has a portfolio made up of approximately 200 investments, of which around 20 are listed on Tadawul, the Saudi Stock Exchange.
Role
The Public Investment Fund invests in specific projects through equity, loans or guarantees, and allocations of public funds. The PIF also provides medium and long-term loans to the large-scale government and private industrial projects. The PIF invests in the fields of telecoms, aerospace, energy, green technologies, and security, seeking a focus on housing finance, renewable energy, and information technology.History
The Saudi Arabian 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.Since its inception, the 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. In July 2014, the Council of Ministers granted the 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.
PIF post-CEDA
In March 2015, oversight of PIF was moved from the Ministry of Finance to the Council of Economic and Development Affairs. CEDA was created following the fluctuations in oil prices in 2014, in order to improve efficiency in the government’s decision-making apparatus. As part of this process, a new PIF was appointed, chaired by Crown Prince Mohammad bin Salman Al Saud.Following these changes, the Board is taking steps to refine its investment capabilities and enable the fund to manage a broader portfolio of current and new assets, ensuring that it is aligned with the government’s Vision 2030. The aim is to diversify government resources and the economy and to help unlock strategic sectors.
Investment projects
Beginning in 2015 the PIF began making a number of high-profile investments, including acquiring a 38% stake in South Korea’s Posco Engineering & Construction Co. in July 2015 and establishing a sizable fund with French firms in October 2015. In June 2016, the PIF acquired an approximate 5% stake in Uber for $3.5 billion. On 14 October 2016, SoftBank Group announced it had signed a memorandum of understanding with the PIF for the establishment of a London-based SoftBank Vision Fund which aims to invest up to $45 billion over five years in the tech sector.In March 2016, it was announced that ownership of Saudi Aramco would be transferred to the PIF and that the Kingdom will seek to list 5 percent of Aramco’s shares by 2017. The PIF expects to become the largest sovereign wealth fund in the world with assets of $2 trillion.
On 20 May 2017, during the Saudi-US CEO Forum which was part of President Donald Trump's official trip to Saudi Arabia, the Public Investment Fund announced plans to "invest $40 billion in infrastructure projects, mostly in the U.S." Saudi Arabia, which is "working to diversify its economy" entered into business deals with General Electric, Lockheed Martin and The Blackstone Group. Blackstone, whose CEO and founder — Stephen A. Schwarzman — is a top supporter of President Donald Trump, entered into a non-binding memorandum by which the PIF committed $20 billion to the project. During the CEO Forum US-Saudi, arms deals were announced including a pledge to "assemble 150 Lockheed Martin Black Hawk helicopters" in Saudi Arabia, representing 450 jobs in Saudi Arabia" as part of the "$6 billion deal for Black Hawks."
Qiddiyah, an entertainment megaproject was established on 7 April 2017, and is currently being built, is wholly owned by PIF.
On 31 July 2017, the PIF announced it will spearhead the Red Sea project for luxury beach resorts built over 50 islands unlocking of coastline. PIF will inject initial capital in order to raise funds for investments by international actors in the tourism and hospitality sectors.
On 7 August 2018, Elon Musk announced that he was considering taking automotive and energy company Tesla private and that funding was "secured." In a follow-up blog post six days later, Musk said the Saudi Arabian sovereign wealth fund had met with him several times since early 2017 to express interest in such a move "because of the important need to diversify away from oil." As of that post, the fund held almost 5% of Tesla stock, purchased through public markets.
On 29 January 2019, Saudi Arabia has announced setting up a closed joint-stock company named NEOM with $500 billion. The aim of this company that wholly owned by the PIF, the sovereign wealth fund, is to develop the economic zone of Neom.
In March 2019, it was revealed that PIF paid a New York communications firm, Karv Communications, $120,000-a-month in order to repair the Saudis diplomatic damaged reputation after the Assassination of Jamal Khashoggi.
On 27 April 2020, PIF purchased a 5.7% stake in concert distributor Live Nation.
On 16 May 2020, the Public Investment Fund, has purchased minority stakes in major U.S. companies including Boeing, Facebook and Citigroup, according to a U.S. regulatory filing. PIF disclosed a $713.7 million stake in Boeing, around $522 million in Citigroup, a $522 million stake in Facebook, a $495.8 million stake in Disney and a $487.6 million stake in Bank of America. It also disclosed a small stake in Berkshire Hathaway. PIF also disclosed an $827.7 million stake in oil company BP.
On 18 May 2020, the SoftBank Group confirmed that during the fiscal year 2019-2020, the Vision Fund, in which Saudi Arabia invested $45 Billions, incurred loss calculated at $17.7 billion, after the value of investments was written down. The losses were related to the investments in WeWork and Uber Technologies Inc. In 39-year history of SoftBank, the Saudi Arabia-backed funds paid the group its worst ever losses, where the overall company losses were 1.36 trillion yen.
In June 2020, PIF purchased a 2.32% stake in India's Jio Platforms, a subsidiary of Reliance Industries Limited.