Public Investment Fund - Investment Club

8 min read

PIF’S Definition:

The Public Investment Fund is the sovereign fund of the Kingdom of Saudi Arabia and is one of the largest sovereign funds around the world

The Fund has pioneered and diversified investment portfolios by investing in new and promising sectors at the local and global levels and has adopted a mechanism that contributes to generating direct and indirect job opportunities and localizing technologies and knowledge, contributing to achieving one of the goals of Vision 2030 in reducing unemployment rates. It also seeks to achieve the objectives of the other vision of the Kingdom as the main engine of economic and investment growth in the Kingdom

The role of the Fund has emerged through the achievement of achievements and targets, perhaps.

the most prominent of which are:

Creating more than 644,000 jobs
93 companies are established in the Fund's portfolio of companies.
13 Strategic Sectors
The Fund has assets under management (AUM) worth more than 2.63 trillion riyals.

Establishment of the Fund:

A glimpse of the Board of Directors:

The board of directors in the fund consists of a group of prominent leaders in various fields, chaired by His Royal Highness Crown Prince Mohammed bin Salman Al Saud, who plays a vital role in guiding the fund's investment strategies and ensuring the achievement of its defined objectives. The board also brings together diverse expertise in financial, economic, and administrative fields, contributing to making wise decisions and ensuring the desired returns for the fund.

Key Leaders (Board of Directors Members):

An overview of the Fund’s program:

The Public Investment Fund program was launched in 2017 as part of an integrated system of programs launched by the Council of Economic and Development Affairs to achieve Vision 2030. The Fund’s program is directly concerned with achieving the second pillar of the vision 2030, which is creating a “prosperous economy.” During its first edition (2018-2020), it contributed to achieving an actual and tangible impact on the investment and economic levels regarding thought, global performance, planning and application.

Today, after the program has made great strides in achieving many of the Fund’s investments and ambitious institutional plans, it is setting out to formulate its policies, strategies, plans and vision for the coming years (2021-2025), through major and detailed objectives at the level of local and global investments. In addition, the program aims to enhance the fund's role as a driver of economic diversification in the Kingdom.

Direct Objectives:

Maximizing the assets of the Public Investment Fund.
Launching new sectors through the Public Investment Fund.
Building strategic economic partnerships through the Public Investment Fund.
Localization of technologies and knowledge through the Public Investment Fund.

Ambitions:

The program aims to achieve the ambitions of Vision 2030 related to economic diversification, development of new sectors, and improvement of quality of life. The targets of the Public Investment Fund by the end of 2025 revolve around the following:

Increasing the managed asset value to approximately 4 trillion Saudi riyals.
Contributing to non-oil GDP cumulatively by 1.2 trillion Saudi riyals through the fund and its subsidiaries.
Investing at least 150 billion Saudi riyals annually in new local projects.
Creating 1.8 million direct and indirect jobs by 2025

Additionally, it aims to contribute to achieving major ambitions aligned with Vision 2030 by the end of 2030, including:

Increasing The value of assets under management (AUM) to 7.5 trillion Saudi riyals.
The fund and its subsidiaries aim to contribute to increasing the annual non-oil Gross Domestic Product (GDP) by 7%.

Sources of Financing:

The financing sources for the fund's operations and investments consist of four main resources:

Increase in capital from the state.
Government-owned assets transferred to the fund.
Loans and debt instruments.
Retained returns from investments.

PIF Investments

The Fund developed six investment portfolios, four of which are local and two are global:

1-International Diversified Pool

The portfolio focuses on diversifying income sources, liquidity, and investments outside the Kingdom and the Middle East and North Africa region. It also diversifies geographically into North America, Europe, Asia, Latin America, and Africa. This is through investments in fixed income, public and private equities, real estate, infrastructure, and alternative investments.The most prominent international investments are:

AccorInvest Group
Jio Platforms Ltd.
Uber Technologies Incorporation
Lucid Motors Inc.

2-International Strategic Investments

This portfolio is characterized by a range of long-term investments that aim to establish strategic partnerships through direct and indirect investments, focusing on sectors associated with future industries.

3-Saudi Giga-Projects

The portfolio focuses on major projects in the Kingdom, aiming to empower them and drive investment forward, as well as establishing new systems and launching new sectors within the Kingdom. The portfolio is designed to stimulate the economy, and its impact is expected to extend beyond the real estate and infrastructure development sectors, contributing to economic diversification without relying on oil. There are currently five major Saudi projects in the fund

NEOM Project

It is a city in the northwest of the Kingdom of Saudi Arabia on the Red Sea. It stands out as a remarkable example of sustainability, development, innovation, economic diversification, and social progress. Its strategy revolves around developing 16 diverse sectors. The "The Line" project is one of the most significant development projects in Neom, about 170 kilometers within the city. The aim of The Line project is to create an attractive environment for innovators, entrepreneurs, and investors, with a focus on humanity and nature, to make it a unique city in the world of smart cities. The key features of "The Line" project include preserving 95% of the nature in Neom's lands by making the city vehicle-free and providing the ability to travel between the furthest points in the city within a period not exceeding 20 minutes.

Red Sea Project

Located on the West Coast, where the Red Sea Project borders from the city of Al-Sahaf North to the city of Amlam South, the project is a renewed tourist project with more than 90 uncontaminated islands and ancient archaeological sites.

Qiddiya Project

It is a new global city located amidst the majestic Tuwaiq mountains, just 40 minutes away from the center of Riyadh. It serves as a global hub for entertainment, sports, and culture, based on five fundamental pillars: sports, nature and environment, parks and tourist attractions, movement and mobility, arts, and culture.

Roshin

It is a national real estate development company that focuses on developing integrated residential neighborhoods, providing a modern lifestyle according to the highest standards. It is based on the concept of lifestyle, work, and entertainment in the same place to transform the urban landscape in the Kingdom.

Diriyah Company

Diriyah is a unique destination for the existence of distinctive cultural and historical monuments. The world-important destination classifies the UNESCO World Heritage Site in the Tarif region. The project is important because it embraces many heritage and cultural monuments related to the Kingdom's history.

4-Saudi Real Estate & Infrastructure Development

This portfolio focuses on the development of real estate assets while upgrading the quality of owned infrastructure through the development of tourism and housing projects, as well as attracting the investments of leading companies in development and foreign and domestic capital. Among the prominent investments are:

Saudi Arabian Mining Company (Ma'aden)
Qassim Cement Company (QACCO)
Gulf Lab for Electric Equipment Testing

5-Saudi Sector Development

The fund aims to have a clear stimulating and complementary role in the private sector by investing in new sectors and unleashing their potential to create significant job opportunities and develop human capabilities within them. It has established companies in promising new sectors as part of its efforts through this portfolio to provide opportunities for the private sector to develop and enhance these sectors, alongside encouraging investment in them.

6-Saudi Equity Holdings

This portfolio represents a significant portion of the fund's assets at present, encompassing both listed and unlisted companies across various sectors. The fund aims to maximize investor value and market capitalization in Saudi companies through this portfolio, in addition to enhancing governance standards, capital management, and dividend distribution policies. The fund also places special emphasis on monitoring the implementation of available opportunities across different sectors to promote sustainable growth and economic sustainability in the Kingdom.

The PIF-owned companies:

Diversity in the companies owned by the Public Investment Fund (PIF) is considered a fundamental element in its investment strategy, encompassing a wide range of sectors such as energy, technology, manufacturing, and financial services. This diversity enhances investment opportunities, reduces risks, and contributes to portfolio performance. However, it should be noted that the PIF may not own full stakes in these companies, as its investments may be made through partial stakes or strategic partnerships, allowing it opportunities to achieve returns and impact without the need for full control.

Saudi Sports clubs owned by the fund:

On June 5, 2023, the Saudi Ministry of Sports and the Public Investment Fund announced the conversion of four Saudi sports clubs - Al-Ittihad, Al-Ahli, Al-Nassr, and Al-Hilal - into companies owned 75% by the Public Investment Fund and 25% by non-profit sports institutions.

Click on the image to listen to the podcast!

REFERENCES:

https://www.pif.gov.sa/ar/pages/homepage.aspx

https://www.vision2030.gov.sa/en/vision-2030/vrp/public-investment-fund-program/

Ghaida alsalami alshammari
Aryam hussain alharthi
Lujain Imad alrasheed