Saudi Arabia teams up with ‘King of Wall Street’ on infrastructure
The deal that will see Saudi Arabia team up with the largest investment group in the world, BlackRock, is a major boost for the Kingdom’s investment scene and a springboard for significant investment in domestic infrastructure over the next decade.
Announced on the eve of the Future Investment Initiative in Riyadh, the deal will set up a National Infrastructure Fund that will help deliver some SR200 billion ($53 billion) of essential investment in real assets — schools, hospitals, transport and the digital foundation, among others — between now and 2030.
It is a significant step for the National Development Fund, one of the lesser-known agents of the Kingdom’s economic development, in comparison to its high-profile collaborator, the Public Investment Fund.
The NDF, run by Stephen Groff, already operates a number of investment vehicles in Saudi Arabia, in sectors as diverse as real estate, industry, tourism and culture.
The new one, its biggest yet, will not be sectoral specific, but will have a bent towards social infrastructure, like new educational facilities, hospitals and health facilities, as well as big-ticket transport initiatives. All these have a direct impact on the lives of citizens and residents in in the Kingdom.
The financial resources will come from the government, as part of the development plan under Vision 2030, but the investment expertise will come from BlackRock, which under CEO Larry Fink has become the biggest asset manager in the world, with assets nearing a staggering $10 trillion.
The Financial Times recently called Fink “the undisputed king of Wall Street.”
Fink is a long-standing friend and partner of the Saudi investment scene, having attended the original FII forum in 2017, and BlackRock has since become an advocate of promoting ESG — environmental, social and governance — principles of investment practice, which is the major theme of this year’s FII.
BlackRock is a global leader in infrastructure investment, and its imprint on the new investment fund will help ensure it is run according to international best-practice standards.
This, in turn, will give confidence to foreign and domestic investors from the private sector looking to exploit opportunities presented by the transformation of the Saudi Arabian economy under Vision 2030.
The new fund will benefit from two seasoned Saudi financial professionals. It will be run by Abdullah Abobakr, the project director on behalf of NDF, with advice from Yazeed Almubarak, CEO of BlackRock Saudi Arabia.
If all goes to plan, the new fund will accelerate private sector involvement in the national investment setup through public-private partnerships, and offer opportunities for foreign investors. It will also free up some of the pressure on the government budget.
The new fund launches as the Kingdom’s economy and markets are booming, with the global economy emerging from the pandemic recession, and oil revenues growing as the price of crude and other energy sources continue to rise.
The new infrastructure fund will support the aims of the National Investment Strategy launched by Crown Prince Mohammed bin Salman earlier this month, with the ambition of attracting more than $100 billion of foreign investment into the Kingdom.
- Frank Kane is an award-winning business journalist based in Dubai. Twitter: @frankkanedubai