1. How has the fund’s purpose changed?
What was once a sleepy government holding company is now a vehicle for the global ambitions of the country’s de facto ruler, Crown Prince Mohammed Bin Salman, under a plan known as Vision 2030. Its main purpose is to stimulate inward investment, access new technologies, develop local industries and address widespread underemployment in the kingdom. One focus is tourism: In a country that until recently was largely closed off to foreign holidaymakers and entertainment was a taboo, PIF is investing in luxury resorts, cinemas and entertainment complexes to lure more tourists, and to stop Saudis seeking fun abroad. It also does deals just to make money. The fund is expanding its team in New York to manage a growing portfolio of US stocks.
2. What does the PIF invest in?
It’s gradually reducing its legacy holdings in local businesses such as Saudi National Bank and Saudi Telecom Co. to free up money for other investments. Those include national projects like Neom, a $500-billion city-state that would run entirely on renewable power and export green energy. Since 2016, when it committed $45 billion to SoftBank Group Corp.’s technology-focused Vision Fund, PIF’s foreign interests have also mushroomed. An investment in electric carmaker Lucid Motors Inc. has increased in value to almost $10 billion and the company is opening a factory in Saudi Arabia. The fund has stakes in video game makers Activision Blizzard Inc. and Electronic Arts Inc. and the digital services and retail businesses of Asia’s richest man, Mukesh Ambani.
3. What makes the PIF unusual?
While traditional sovereign funds invest excess national wealth to generate profits in the future, PIF was repurposed as a global investor while the Saudi budget was in deficit. As a result, it’s also turned to borrowing in order to hit its growth targets, which will require it to spend prolifically on development projects at home. It’s already tapped global banks for multi-billion-dollar loans. In 2022, it raised $3 billion from its debut green bond sale. While it may seem incongruous for a petrodollar-backed fund to be raising money from climate-conscious investors, the PIF is the main backer of most of the kingdom’s renewable energy investments. Through Neom, it’s funding one of the world’s largest projects to produce hydrogen fuel without creating any harmful emissions.
4. How big does PIF want to be?
Its assets have almost quadrupled since 2015 to over $600 billion. Prince Mohammed wants it to be overseeing assets of $2 trillion by 2030, which would make it bigger that Norway’s sovereign fund, currently the world’s largest at about $1.4 trillion. The path to $2 trillion will involve more big asset transfers from the state. The fund has also been a major recipient of undeveloped land that’s worth zero on paper. If it’s used for building, its value can soar.
5. What are the PIF’s ambitions in sport?
After buying struggling English Premier League soccer club Newcastle United in 2021, PIF decided to back LIV Golf, an attempt to build a rival tournament to the PGA. It also considered making a bid for Formula 1 motor racing in late 2022. PIF’s investments in sports and competitive gaming and moves to bring major sporting events — and stars like Cristiano Ronaldo — to the kingdom are partly an attempt to boost Saudi soft power. Critics say such deals are “sportswashing,” an attempt to improve the nation’s image and divert attention from a poor human rights record. Saudi Arabia may be following the playbook of neighboring Abu Dhabi, whose Sheikh Mansour bin Zayed Al Nahyan bought another English club, Manchester City, in 2008 and used it as a platform to market the emirate and its state-owned companies around the world.
6. What role does Prince Mohammed play in the PIF?
The fund’s day-to-day operations are managed by Governor Yasir Al-Rumayyan, a close ally of Prince Mohammed. MBS, as the ruler is also known, serves as chairman of the PIF and of most of its companies including Neom. Critics say it’s part of a broader accumulation of power that’s also seen the prince take control of oil policy, security, domestic and foreign affairs in the country. Some Saudi company executives have raised concerns, saying they felt crowded out by an entity so rich and connected that few can compete. The Crown Prince’s influence can be seen in some of the PIF’s deals that appear to be politically motivated, such as its backing of funds set up by former US Treasury Secretary Steve Mnuchin and Jared Kushner, the son-in-law of former President Donald Trump who served as a senior White House adviser under his administration. One of the PIF’s biggest overseas deals — a $45 billion investment in SoftBank’s first Vision Fund — was brokered after a brief meeting between Masayoshi Son and Prince Mohammed. The PIF says all of its board members play an important role in decision-making.
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