PIF’s Lucid deal a VC success even as fund isn’t among top 10 investors in 2021

PIF’s Lucid deal a VC success even as fund isn’t among top 10 investors in 2021
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Updated 02 January 2022

PIF’s Lucid deal a VC success even as fund isn’t among top 10 investors in 2021

PIF’s Lucid deal a VC success even as fund isn’t among top 10 investors in 2021

RIYADH: Saudi Arabia's Public Investment Fund, known as PIF, wasn't among the top 10 global sovereign wealth funds in terms of cash deployment in 2021; however, its investment in Lucid Motors was considered one of the most successful venture capital deals of the year, according to a new industry report. 

The PIF "was not as active in VC as in previous years, but it scored one of the best goals of the season when Lucid Motors went public in July," Global SWF said on Saturday in its annual report on the performance of global sovereign wealth funds.

With a return on investment that was almost 40 times, "every SOI [state-owned investors] should aspire to replicate the success of PIF with Lucid Motors...even if 90 percent of startups are doomed to fail," Global SWF said.

PIF invested $1.3 billion for 63 percent of Lucid in 2018, when the startup was running short of money. "Three years later, the stake is worth $41 billion, and the transaction showcases the competitive advantage of sovereign wealth funds when it comes to venture capital investing, thanks to liquidity and long-term horizon," it added in the report.


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Top 10 SWFs

The Saudi sovereign wealth fund, which plans to be among the largest globally in terms of assets under management by 2030, was among the top 10 SOIs in 2020 when it invested $7.9 billion, according to Global SWF. It assesses funds based on investment deals that are private market transactions with some public deals that are sizable and long-term in nature. Global SWF didn't include investment in domestic development such as NEOM in Saudi Arabia, or any transfer of assets from governments to these funds.  

Global SWF report showed that the PIF was ranked the top fund globally for two years in a row when it invested $61.2 billion in 2016 and $31.4 billion in 2017, as those were the years when it invested in big schemes such as Softbank Vision Fund I and the Blackstone Infra Fund. 

The Fund’s presence on the world stage has grown as it invests in various global markets, which contributes to diversifying sources of income and bringing international expertise to the Kingdom.

Firms to see investment include Lucid Motors, with about $2.9 billion, bringing global investors at its initial public offering listing in July 2021, making it one of the most significant companies in the electric vehicle sector. The company's value has risen from $3 billion to $65 billion.

PIF also ploughed $2.8 billion into Indian companies, such as the mobile network operator Jio Platforms and the conglomerate Reliance.

Saudi Arabia’s sovereign wealth fund is on track to surpass its objective for the second quarter of 2022, and reach SR1.8 trillion ($480 billion) in assets under management, the fund’s Governor Yasir Al-Rumayyan said last month.

The Riyadh-based PIF, is considered a key player in the Kingdom’s diversification strategy, particularly in achieving the Vision 2030 goals.

Global outlook

Assets held by the world's sovereign wealth and public pension funds rose to a record $31.9 trillion in 2021 thanks to rising U.S. stock and oil prices, and investments rose to their highest for several years, Global SWF report showed.

The report on state-owned investment found that the assets managed by sovereign wealth funds rose 6 percent over the year to $10.5 trillion, while those of public pension funds jumped 9 percent to $21.4 trillion.

The report also found that state-owned investors had deployed more money, both in number of deals and by volume, than in any of the previous six years. Some $215.6 billion was spent, almost half of it by sovereign wealth funds.

Singapore's GIC sovereign wealth fund topped the league, increasing its dealmaking by 75 percent to $31.1 billion, spread across 109 deals. Over a third of that capital was invested in real estate, especially logistics.

Overall, emerging markets fell behind, attracting only 23 percent of the capital this year, one of the lowest figures in the last six years, Diego Lopez at Global SWF wrote in the report.

Venture capital investments make up only a small slice of funds deployed by state-owned vehicles overall, but grew by more than 80% this year to $18.2 billion, with Singapore's Temasek accounting for more than a quarter.

The annual report by Global SWF analyzed data from 161 sovereign wealth funds and 275 public pension funds.

(With Reuters)