agency authoritybloombergShe highlighted the growing role of the sovereign wealth fund in Saudi Arabia, with investments of about $600 billion, in building a post-oil future in the Gulf kingdom.
The agency said in an opinion article published, on Friday, by writer Matthew Martin, that the fund is spending generously and unprecedentedly around the world at a time when we are witnessing difficulty in finding wealthy investors.
The Public Investment Fund has acquired sports teams, electric car makers and funded new cities in the desert as it seeks to raise $2 trillion in assets by 2030.
Whether or not all of these investments yield a significant return, the fund’s ultimate goal is to diversify the kingdom’s oil-dependent economy and project Saudi influence around the world, according to the author.
How has the purpose of the Fund changed?
The writer adds, “What was once a dormant government holding company has now become a vehicle for realizing the ambitions of Saudi Crown Prince Mohammed bin Salman under a plan known as Vision 2030.”
The main purpose of the plan is to stimulate domestic investments, access modern technologies, develop local industries, and address the labor shortage that Saudi Arabia suffers from.
One of the areas the fund focuses on is tourism. In a country that until recently was largely closed to foreign tourists and where entertainment was taboo, the fund is investing in luxury resorts, cinemas and entertainment complexes to attract more tourists and stop Saudis from seeking pleasure abroad.
Fund investments
The Saudi sovereign wealth fund is gradually reducing its investments in its old assets in local companies such as the Saudi National Bank and the Saudi Telecom Company, to free up funds and invest them in other investments.
These national projects include the construction of the $500 billion city of NEOM, which will run entirely on renewable energy and export green energy.
The fund also invested in international technology companies, and the value of its investments in the American electric car maker Lucid Motors increased to nearly $10 billion, as the company intends to open a factory in the Kingdom of Saudi Arabia.
The fund also owns stakes in companies operating in the video game industry, digital services and retail companies owned by the richest man in Asia, Indian businessman Mukesh Ambani.
What makes the fund exceptional?
Whereas traditional sovereign funds invest excess national wealth to generate profits in the future, the Public Investment Fund has been repurposed as a global investor while the Saudi budget was in deficit.
As a result, the country has turned to borrowing to meet its growth goals, which will require it to spend heavily on development projects at home.
Saudi Arabia has already used international banks to obtain billions of dollars in loans, and in 2022 it was able to raise three billion dollars in green bond sales for the first time.
The writer says, “While many consider it uncommon for a sovereign fund backed by an oil country to raise money from climate-minded investors, the Saudi Public Investment Fund is the main supporter of most of the kingdom’s investments in the field of renewable energy.”
Through NEOM, the Kingdom is financing one of the largest projects in the world to produce hydrogen fuel without causing any harmful emissions.
Sit on the throne of the largest in the world
The fund’s assets have nearly quadrupled since 2015, to more than $600 billion.
Bin Salman aspires for the fund’s assets to reach about $2 trillion by 2030, which will make it larger than the Norwegian sovereign fund, which is currently the largest in the world at about $1.4 trillion.
The Fund’s ambitions in sports
After buying Newcastle United Football Club in 2021, the fund also decided to support the “Live Golf” league in an attempt to build a global tournament to compete with the “PGI” championship organized by the American Professional Golf Association.
The fund also considered bidding for the Formula 1 car race in late 2022.
The writer believes that the investments of the Saudi Sovereign Wealth Fund in the field of sports and competitive games and its attempts to hold major sporting events inside the Kingdom and to attract the Portuguese star Cristiano Ronaldo, are all partly part of efforts to enhance Saudi soft power.
Critics say such deals are an attempt to improve Saudi Arabia’s image and divert attention from its dismal human rights record.
The writer indicates that Riyadh may be trying to follow in the footsteps of its neighbor, the Emirates, which bought Manchester City in 2008 and used it as a platform to market the emirate and state-owned companies around the world.
