Investment Wealth Fund to Diversify National Revenue Away From Oil

Investment

“We want to be an investment powerhouse,” Public Investment Fund (PIF) managing director Yasir Alrumayyan said in an appearance at a gathering of Saudi officials and corporate giants in the capital city, Riyadh.

Saudi Arabia took a big step towards Alrumayyan’s view of the future by recently inking billions of dollars of deals with Blackstone Group LP and SoftBank Group Corp. The idea originates from Vision 2030’s plan to be a model of excellence and will be financed by a 5 percent public sale of stake in oil-giant Aramco.

These investments will help to reduce Saudi Arabia’s dependence on oil.

Investing the sovereign wealth into various groups helps to increase the proportion of foreign holdings from its current 5 percent to 50 percent, excluding Aramco.

At the center of this investment injection is a 20 billion dollar commitment to the world’s largest private equity manager, Blackstone. A deal with the American group’s infrastructure investment fund is sure to result in great dividends for the Kingdom of Saudi Arabia. Alongside the PIF’s commitment, Blackstone plans to raise an identical 20 billion dollars from other investors, and expects to have over 100 billion dollars for infrastructure projects inside the United States. Terms are currently being negotiated.

Other deals include 45 billion dollars with Japan’s SoftBank VisionFund and 3.5 billon dollars with U.S. company Uber Technologies, Inc. The PIF also helped commence funding for companies like Saudi Arabian Military Industries, e-commerce venture Noon, and Korea’s Posco. The Kingdom of Saudi Arabia stands to receive economic benefits from these global developments, and will look elsewhere for more opportunities to continue economic growth.

These investments signal a belief in developing financial stability abroad, and PIF’s Alrumayyan quickly clarified that the Kingdom will not abandon domestic advancements. Most of the investments we announced and will announce soon are international, but they will be in parallel with our investments in Saudi.”

Vision 2030 Driver for Investment and Diversification

Future plans for foreign and domestic investments will be facilitated by an effort to increase PIF assets from SAR 600 billion to over 7 trillion.

Thus, the increase will guarantee a sustainable revenue stream to create a more balanced economy and greater opportunity in countless sectors like labor or transport. Moreover, the Kingdom stands to benefit through the potentials of innovation with these new corporate partners.
Read more about the new developments on Bloomberg.