Wealthy Gulf nations have taken steps to increase non-oil growth and lessen their reliance on crude oil as pressure from climate change activists and the unpredictability of oil prices has put strain on public budgets. The Kingdom of Saudi Arabia, whose de facto ruler is Crown Prince Mohammed bin Salman, has already said it will invest several billions of dollars in an economic transformation initiative, Vision 2030.
The investments made public in February 2022 include a $2 billion joint venture between China’s J&T Express Group and Saudi Arabia’s Public Investment Fund (P.I.F.), eWTP Arabia Capital, and the Saudi sovereign wealth fund.
What To Know About the Saudi Wealth Fund?
A report from the Sovereign Wealth Fund Institute showed that the P.I.F. is the sixth-largest sovereign wealth fund worldwide, with assets under management totaling $607 billion. The Public Investment Fund, or P.I.F., is a collective of investments that looks after more than $700 billion in Saudi government funds.
It makes money by investing those funds in businesses, properties, and other domestic and abroad projects, ostensibly to boost the Saudi economy. The Fund was created in 1971 by royal decree and maintains offices in Hong Kong, London, and New York, in addition to its main office in Riyadh, Saudi Arabia. P.I.F. has expanded quickly in recent years, supporting what it refers to as “giga projects” in the tourism and business sectors.
What are some of the Fund’s wealth investments?
The P.I.F., one of the world’s most prominent sovereign wealth funds, is at the heart of Saudi Arabia’s Vision 2030 drive to diversify the economy away from oil. Through this mission under the guidance of Crown Prince Mohammed bin Salman, Saudi Arabia has benefited from privileged access and outsized attention from venture capital and private equity groups.
Under Prince Mohammed, the Wealth Fund has invested in many foreign businesses, including Uber, the private equity firm Blackstone, the Japanese conglomerate SoftBank, and sports teams like Newcastle United of the English Premier League.
Additionally, The P.I.F. became Nintendo’s largest outside shareholder in February after increasing its ownership to 8.3%. According to Bloomberg, the Saudi sovereign wealth fund also has shares in at least six other significant video game firms, including Capcom, Electronic Arts, and Take-Two Interactive. It has also invested $38 billion in its gaming studio, Savvy Games Group.
The government also anticipates spending $1.4 billion on entrepreneurship and funding for digital content, including a program called The Garage, a location in the Saudi capital Riyadh that will house start-ups specializing in innovative technology.
Meanwhile, Saudi investment has also taken an interest in the sports industry. For instance, the Public Investment Fund acquired the British football team Newcastle United F.C. in 2021 and invested in LIV Golf, a P.G.A. Tour rival.
According to the goals of Vision 2030, the Fund’s mandate includes developing a digital economy in Saudi Arabia and localizing knowledge and technology. By 2025 and 2030, the P.I.F. intends to manage approximately $1.07 trillion and $2 trillion worth of assets. Smart investments in technology companies, many of which have seen their stock values soar since the coronavirus outbreak, can aid in achieving these growth goals.