Saudi investment fund PIF ‘has $300bn in assets and counting’

Saudi Arabia’s Vision 2030 reform plan is expected to transform the country’s key wealth fund into one of the world’s largest sovereign investment vehicles. (Shutterstock)
Updated 10 June 2019

Saudi investment fund PIF ‘has $300bn in assets and counting’

  • Boost in Kingdom’s wealth fund ‘will improve country’s international investment position,’ study shows

LONDON: Saudi Arabia’s key wealth fund has about $300 billion in assets and its growing size is set to “improve the country’s international investment position,” a new report has found.
Roughly a quarter of the Kingdom’s Public Investment Fund (PIF) holdings are overseas, with investments in companies like electric car maker Tesla and SoftBank’s Vision Fund, according to the Institute of International Finance (IIF) analysis. 
A raft of privatization deals and the planned $69 billion sale of a controlling stake in petrochemicals giant Saudi Basic Industries (SABIC) to Saudi Aramco is set to further boost the fund’s coffers, according to the IIF.
That means it is likely PIF will hit a target of $400 billion in assets by 2020, something the fund’s representatives have previously suggested is on track. 
“The expected further increase in the PIF’s assets abroad will improve the country’s international investment position,” the IIF report said.
“We now estimate PIF’s assets at about $300 billion, of which one-fourth are invested abroad, including in … Blackstone’s infrastructure fund, Egypt’s investment fund, Russia’s investment fund, and Uber. Proceeds from privatization (a target of about
$200 billion) and the eventual 5 percent sale of Aramco (a target of $100 billion) will further boost the PIF’s assets.”
However, the IIF noted that the privatization drive has been delayed due to legal impediments, concerns about implications for the labor market, and — in the case of the planned sale of a 5 percent stake in Saudi Aramco — regulatory procedures that need to be addressed.
The Vision 2030 reform plan envisions the transformation of the PIF into one of the world’s largest sovereign investment vehicles, managing $2 trillion by 2030. 
The Sovereign Wealth Fund Institute estimates PIF’s current assets at $320 billion, higher than the IIF’s assessment, making the Saudi entity the 10th largest fund of its type globally. Representatives of PIF did not immediately respond to a request for comment. 
The IIF report also found that Saudi Arabia’s holdings of US government bonds climbed to a peak of $170 billion in March 2019. The Kingdom has also “repositioned” its assets from euro and UK pounds to US dollars, the institute said.
“The increase in the Saudi appetite for US bonds coincided with relatively higher US yields and unfavorable investment sentiment in (emerging markets) and the euro zone,” the report noted.


New Delhi to sell full stake in debt-ridden Air India

Updated 27 January 2020

New Delhi to sell full stake in debt-ridden Air India

  • The airline, which owes more than $8 billion, has been struggling to pay salaries and buy fuel
  • Formerly India’s monopoly airline, carrier was once known affectionately as the ‘Maharaja of the skies’

MUMBAI: New Delhi intends to sell its entire stake in the debt-crippled national carrier Air India, the government announced Monday, after failing previously to secure any bids for a majority share.
The airline, which owes more than $8 billion, has been struggling to pay salaries and buy fuel, with officials recently warning that it would have to shut down unless a buyer was found.
On Monday the civil aviation ministry released a document inviting bids for a 100 percent stake, setting March 17 as the deadline for initial submissions.
Potential buyers would have to assume around $3.26 billion in debt, the document said.
The government was forced in 2018 to shelve plans to sell a 76 percent stake in Air India after failing to attract any bidders.
India’s Tata Group, Singapore Airlines (SIA) and IndiGo were all linked to a takeover but subsequently ruled themselves out.
Founded in 1932 and formerly India’s monopoly airline, the company was once known affectionately as the “Maharaja of the skies.”
But it has been hemorrhaging money for more than a decade and has lost market share to low-cost rivals in one of the world’s fastest-growing but most competitive airline markets.
In November aviation minister Hardeep Singh Puri had said the airline would “have to close down if it is not privatized.”
State-run oil companies halted fuel supplies to Air India in August after it fell behind on payments, though the firms agreed to lift the suspension a month later after talks brokered by the government.
The country’s aviation sector has been stuck in a slump since the collapse of Jet Airways last year.