About 27% of the Public Investment Fund’s assets are located outside Saudi Arabia
Plan Public Investment Fund Saudi Arabia to increase annual spending to up to $70 billion, while executives at three alternative investment firms privately expressed concerns that the sovereign wealth fund would direct more money to huge local projects, as reported. Bloomberg Agency.
The Fund has said publicly that its allocation to international investments as a proportion of total spending could fall by a third.
The PIF is expected to continue making direct investments globally, and one possible outcome may be to focus only on pumping money into blue-chip companies, according to executives at two private equity firms. The fund could also prioritize entities with a significant local presence, given the government’s focus on building the local asset management industry.
Informed people told Bloomberg that this could lead to a move away from investments in global private equity, infrastructure and hedge funds.
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Executives consider the focus on local projects a stark shift compared to recent years, when wealth funds from the Middle East were keen to invest billions of dollars with some of the world’s largest investors. The Public Investment Fund, with assets worth $925 billion, was one of the most prominent investors in companies such as BlackRock and Brookfield Asset Management.
Saudi Arabia is focusing on the Public Investment Fund to lead its multi-trillion-dollar economic diversification plan.
“It seemed like everyone wanted a share of the Saudi investments that the PIF was pumping in,” said Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington. Many people simply viewed the fund as an endless box.”
Currently, about 27% of the Public Investment Fund’s assets are located outside Saudi Arabia, according to data provider Global SWF. “We expect this ratio to remain relatively stable, as the fund’s domestic investments are growing faster than the growth in international deals,” said Diego Lopez, president of the research consultancy.
People familiar with the matter said that the fund will continue to make deals outside the Kingdom through the international investments team, although these deals are expected to be circumstantial and selective, as they will be more focused on sectors that help boost the local economy.
