10/29/2024–|Last updated: 10/29/202408:42 PM (Mecca time)
The Saudi Public Investment Fund announced its intention to reduce its share in foreign investments by up to a third, in a move aimed at refocusing on supporting the local Saudi economy.
The fund seeks to reduce the percentage of its international investments from 30% to between 18% and 20%, as the fund’s governor, Yasser Al-Rumayyan, explained during his participation today, Tuesday, in the “Future Investment Initiative” conference in Riyadh that the fund began its activity with a main focus on local investments, and then expanded. Later to include international investments until its international share reached 30%.
Al-Rumayyan pointed out that this new trend reflects the Kingdom’s efforts to enhance its local economic capacity and gradually move away from complete dependence on oil revenues, stressing that “the amounts of money invested locally are increasing,” and this strategy aims to bring the fund’s assets to a value of $2 trillion. By 2030, according to the vision of Saudi Crown Prince Mohammed bin Salman to diversify the Kingdom’s economy.
Prominent figures from the worlds of finance, business, and technology are attending the Future Investment Initiative conference in Saudi Arabia, which may constitute an opportunity for attendees to build relationships with some of the largest companies in Saudi Arabia and the sovereign wealth fund, which has $925 billion in assets under management.
Moves to support internal growth
These steps coincide with increased pressure on the Fund to achieve sustainable returns, as the Fund seeks to focus on a group of major projects locally, with an emphasis on setting new conditions for investors who wish to obtain financing from it.
The Financial Times indicated that the fund tended to request joint investments from international partners to enhance the development of the local economy, instead of relying on purely foreign investments.
This shift comes after the Fund’s sale of some of its prominent international investments, including the sale of its shares in BlackRock and Carnival, in addition to abandoning its stake in the Live Nation Entertainment Group.
Contractions in international presence
Data from the US Securities and Exchange Commission indicate that the value of the Saudi Public Investment Fund’s traded shares in US markets decreased from about $35 billion at the end of 2023 to $20.5 billion in March 2024, then stabilized in the second quarter at $20.6 billion.
Despite this, the Fund has not set a deadline for reaching the new target percentage for international investments, but its continued directing more resources towards projects within the Kingdom shows its commitment to supporting the local economy.
Economic diversification in the Kingdom
The Public Investment Fund is a major tool in achieving economic diversification plans in the Kingdom, as it has launched many major projects within Saudi Arabia, including the fields of tourism, entertainment, technology, and renewable energy.
The fund’s investments had a wide resonance in global markets, when it invested $45 billion in the SoftBank Vision Fund in 2016, and $20 billion in the Blackstone Infrastructure Fund in 2017. The fund also entered into prominent deals such as the acquisition of Newcastle United and financing the Championship. Leaf Golf.
But the new steps, according to Al-Rumayyan, indicate a change in the Fund’s strategy towards international partnerships, as he stated that global investors now prefer to jointly invest with the Fund in internal projects instead of relying solely on the Fund’s financing for their projects.
The shift towards enhancing local investments is a step that reflects the Kingdom’s ambition to achieve sustainable economic growth and achieve self-sufficiency, as it allows the Fund to finance vital local projects that aim to develop a strong infrastructure and generate job opportunities for Saudis.
In light of its commitment to supporting the economic transformation in the Kingdom, the Fund continues to develop its huge projects, such as NEOM City and renewable energy projects.
