How Saudi Arabia’s sovereign fund created a nation of opportunities

As Saudi Arabia is steadily diversifying its economy, the Public Investment Fund is successfully creating a healthy investment ground for businesses to thrive and grow in the Kingdom. (SPA)
As Saudi Arabia is steadily diversifying its economy, the Public Investment Fund is successfully creating a healthy investment ground for businesses to thrive and grow in the Kingdom. (SPA)
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Updated 25 December 2022
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How Saudi Arabia’s sovereign fund created a nation of opportunities

How Saudi Arabia’s sovereign fund created a nation of opportunities
  • PIF owns more than 50 companies and has created more than 500,000 direct and indirect

RIYADH: In 2016, Saudi Arabia announced the Vision 2030 blueprint to diversify the Kingdom’s economy. It dared to change its identity as an oil-rich nation to a harbinger of new ideas that would shape the world.

Six years later, the Kingdom has ventured into new realms of opportunities that the Arab world would not have dared to dream of even a decade ago, thanks to its sovereign fund that controls assets worth $620 million: the Public Investment Fund.

Recognized as one of the largest sovereign wealth funds in the world, the PIF has led economic diversification in Saudi Arabia through strategic international and national investments.




Saudi Coffee Co. aims to turn Saudi coffee beans into a global product. (Supplied)

Transforming the idea of Saudi Arabia globally, the fund owns more than 50 companies and has created more than 500,000 direct and indirect jobs.

Strategic force

In May 2022, PIF launched Saudi Coffee Co., aiming to turn Saudi coffee beans into a global product.

A press release issued by the PIF noted that the company plans to invest SR1.2 billion ($320 million) in the next 10 years.

PIF also said that the new firm would play a pivotal role in developing sustainable coffee production in the southern Jazan region, home to the world-famous Coffea Arabica.

HIGHLIGHTS

• KSA has ventured into new realms of opportunities that the Arab world would not have dared to dream of even a decade ago, thanks to the PIF which controls assets worth $620 billion.

• In May 2022, PIF launched Saudi Coffee Co., aiming to turn Saudi coffee beans into a global product. PIF noted that the company plans to invest SR1.2 billion in the next 10 years.

• In February 2022, PIF opened three new offices in London, New York and Hong Kong in line with its global expansion plans.

• The expansion of these offices is a part of the fund’s 2021-2025 strategy to grow its assets under management to $1.07 trillion by the end of 2025.

In an exclusive interaction with Arab News on the sidelines of the Future Investment Initiative in Riyadh, the CEO of Saudi Coffee Co., Raja Alharbi, said that the firm will produce 2,500 tons of coffee within five years, from 300 tons produced annually now.

In October, PIF also launched Halal Products Development Co., targeted at turning the Kingdom into a global halal hub.

We have four relatively new sectors: entertainment, sports, tourism and culture … PIF is making investments in these sectors.

Faisal Al-Ibrahim, Saudi minister of economy and planning

“HPDC aims to localize knowledge, technology, and innovation to develop halal products, including foods, cosmetics and pharmaceuticals. The company also aims to promote investment and economic opportunities for the industry by introducing various services, including specialized advisory,” said PIF.

In the same month, assuring its commitment to creating a sustainable future, the PIF raised $3 billion through its green bond issuance.

According to a report by the Saudi Press Agency, the bond was issued in three tranches and was oversubscribed over eight times, with orders exceeding $24 billion.

We want to reach $1 trillion by 2025. And we are now almost less than $700 billion. So we need close to $400 billion to reach this size of assets.

Yasir Al-Rumayyan, PIF governor

As Saudi Arabia is steadily diversifying its economy, the PIF is successfully creating a healthy investment ground for businesses to thrive and grow in the Kingdom.

During his speech at the Future Investment Initiative, the Minister of Economy and Planning Faisal Al-Ibrahim said that PIF played a crucial role in this economic transition period in Saudi Arabia.

“PIF is making bold investments. We have four relatively new sectors: entertainment, sports, tourism and culture. These sectors did not materially exist before seven years, and PIF is making investments in these seven sectors,” he said.

The fund also provided sufficient support to its entities as the world faced several issues last year due to COVID-19 and geopolitical tensions, resulting in supply chain disruptions.

Earlier in August, Faisal Sultan, managing director of global operations at Lucid, said that PIF — which owns over 60 percent share in the electric car manufacturing firm — was very supportive when the firm faced a supply crunch which led to two production target cuts.

The $1 trillion ambition

In February 2022, PIF opened three new offices in London, New York and Hong Kong in line with its global expansion plans.

The expansion of these offices is a part of the fund’s 2021-2025 strategy to grow its assets under management to $1.07 trillion by the end of 2025 while continuing to create new sectors, companies and jobs.

PIF Governor Yasir Al-Rumayyan said he had a detailed strategy to increase the fund’s assets between $2 trillion to $3 trillion by the end of this decade.

“We want to reach $1 trillion by 2025. And we are now almost less than $700 billion. So we need close to $400 billion to reach this size of assets,” said Al-Rumayyan, during an interview given to the Thmanyah podcast.

He added: “We have a complete plan from now till 2030 on how to reach a trillion and reach between $2 to $3 trillion, and His Highness Crown Prince is determined to reach it.”

In September, Bloomberg reported that PIF is planning to hire 50 more employees for its New York office.

The Bloomberg report noted that PIF is planning to recruit staff for multiple positions in various sectors, including investment research, legal and compliance, and hiring a chief of staff for its New York office.

Earlier in November, PIF increased its stakes in Meta and Alphabet in the third quarter of 2022. At the end of the third quarter, PIF has about 3.26 million class A shares in Facebook’s parent company Meta – up from 418,000 at the end of the first quarter and 2.94 million at the end of June.

PIF also significantly increased its share in Google’s parent firm Alphabet to 4.26 million class A shares at the end of the third quarter from 213,000.

Understanding the necessity to protect the environment, PIF is investing in many green projects. For example, in October, the fund announced the launch of the Regional Voluntary Carbon Market Co. in collaboration with Tadawul Group for SR500 million.

Also, during the Future Investment Initiative conference this year, PIF auctioned off 1.4 million tons of carbon credits for the first time, widely touted as the biggest-ever carbon credit sale.

As PIF continues its journey to achieve sustainability by investing in renewables and hydrogen, along with planting millions of trees in the Kingdom, the future of Saudi Arabia is bright, and more monumental initiatives can be witnessed from the fund in the future too.

 


Saudi Arabia, Russia stress need for OPEC+ to commit to deal

Saudi Arabia, Russia stress need for OPEC+ to commit to deal
Updated 08 December 2023
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Saudi Arabia, Russia stress need for OPEC+ to commit to deal

Saudi Arabia, Russia stress need for OPEC+ to commit to deal

RIYADH: Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin stressed in their meeting in Riyadh the need for OPEC+ members to commit to the group’s agreement, Saudi Press Agency said on Thursday, citing a joint statement.
They welcomed the close cooperation between their nations and the successful efforts of OPEC+, of which both are members, to provide stability in global oil markets.
They said it is important that this cooperation continues and stressed the need for all member states to adhere to OPEC+ agreements in a way that serves the interests of producers and consumers and supports the growth of the global economy.
OPEC+ is a group that constitutes the Organization of the Petroleum Exporting Countries and Russia and other allies.
Regarding Sudan, the two leaders stressed the importance of building on the Jeddah Declaration, which was signed on May 11 with the aim of protecting civilians during the conflict in the North African country.
On Iran, Putin welcomed the resumption of diplomatic relations between Riyadh and Tehran and expressed hope that this would lead to enhanced stability and security in the region.
Both sides also stressed their full support for regional and international efforts to reach a comprehensive political solution to the crisis in Yemen.
The two leaders said they were keen to enhance mutual and joint investments in their countries.
They welcomed a 46 percent increase in the volume of bilateral trade in 2022, compared with 2021, and affirmed their intentions to continue to work together to enhance and diversify trade relations.
Turning to the crisis in Ukraine, the Russian side praised the humanitarian and political efforts undertaken by Saudi Arabia.


Saudi crown prince reveals urban plan and branding for Qiddiya City megaproject

Saudi crown prince reveals urban plan and branding for Qiddiya City megaproject
Updated 07 December 2023
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Saudi crown prince reveals urban plan and branding for Qiddiya City megaproject

Saudi crown prince reveals urban plan and branding for Qiddiya City megaproject
  • He says the city aims to be the foremost global destination for entertainment, sports and culture, and to boost the Kingdom’s economic growth, international standing and strategic position
  • Qiddiya’s branding adopts ‘play’ as its main concept, based on research showing this to be vital for cognitive development, emotional expression, social skills, creativity and health

RIYADH: Saudi Arabia’s Crown Prince Mohammed bin Salman on Thursday revealed the urban plan and global branding for Qiddiya City, a massive entertainment project under construction on the outskirts of Riyadh.

The crown prince, who chairs the board of directors of the Qiddiya Investment Company, said the city aims to quickly establish itself as the foremost global destination for entertainment, sports and culture, which will benefit the Kingdom by helping to boost its economic growth, international standing and strategic position, the Saudi Press Agency reported.

It is also designed to improve quality of life, the prince added, and to position Riyadh as one of the top 10 economies in the world.

The investment in Qiddiya is a cornerstone of Saudi Vision 2030, he said, which aims to develop and diversify the Kingdom’s economy, reducing the country’s reliance on oil revenues and creating thousands of job opportunities for Saudi youth.

Qiddiya, which is one of the major projects overseen by the Public Investment Fund, is envisioned as an essential source of support for the Kingdom’s ambitious tourism and economic goals, in addition to improving the quality of life for residents and visitors. It is expected to help attract local, regional and international investors, which will in turn provide support to Riyadh.

Work on the Qiddiya project, in the form of about SR10 billion ($2.7 billion) invested in construction projects, began in 2019.

It was revealed that the branding for Qiddiya will adopt as its main motif the concept of “play,” based on decades of research showing this to be vital for cognitive development, emotional expression, social skills, creativity and physical health.

Studies have also shown the positive effects of recreational activities on society, including their ability to help overcome differences and bridge divisions between individuals, and enhance empathy and social cohesion.

Qiddiya City, described as a one-of-a-kind destination that promises to provide endless fun and excitement for residents and visitors through unrivaled entertainment, sports events and activities, culture and exceptional urban living, will eventually include 600,000 residents and 60,000 buildings in an area covering 360 square kilometers.

It is expected to create more than 325,000 jobs, generate a nominal gross domestic product of SR135 billion a year, and attract 48 million visitors annually.

Located about 40 minutes from the center of Riyadh, overlooking the stunning scenery of the Tuwaiq mountains, Qiddiya City’s attractions will include a gaming and esports district, a motorsports racetrack, golf courses, a massive water park, and the Six Flags Qiddiya theme park. It will also be home to a sports stadium that includes the world’s largest Olympic museum. Its first facilities are expected to open within two years.


Closing Bell: TASI ends green at 11,225 points with $1.62bn trading volume 

Closing Bell: TASI ends green at 11,225 points with $1.62bn trading volume 
Updated 07 December 2023
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Closing Bell: TASI ends green at 11,225 points with $1.62bn trading volume 

Closing Bell: TASI ends green at 11,225 points with $1.62bn trading volume 

RIYADH: Saudi Arabia’s Tadawul All Share Index experienced a slight rise on Thursday, gaining 51.33 points, or 0.46 percent, to close at 11,225.35.   

The benchmark index saw a total trading turnover of SR6.1 billion ($1.62 billion), with 107 listed stocks advancing and 107 retreating.  

Moreover, the parallel market Nomu witnessed an increase of 399.17 points, or 1.70 percent, to end the day at 23,949. The market had 24 listed stocks advancing and 31 retreating.  

The MSCI Tadawul Index also saw an increase, inching up by 4.56 points, or 0.32 percent, to close at 1,439.56.  

TASI’s top performer was Development Works Food Co., which saw its share price surge by 9.92 percent to SR135.20.   

Other significant gainers included Al-Omran Industrial Trading Co. and National Agricultural Development Co., with their share prices rising by 7.99 percent and 5.66 percent to SR37.85 and SR28, respectively. Leejam Sports Co. and ACWA Power Co. also reported strong performances.  

Conversely, Al-Baha Investment and Development Co. experienced a decline, with its share price dropping by 6.67 percent to SR0.14.   

Taiba Investments Co. and Savola Group also faced downturns, with their share prices decreasing by 5.35 percent and 3.38 percent to SR25.65 and SR38.55, respectively. Arabian Pipes Co. and Saudi Reinsurance Co. were among the day’s worst performers.  

On the announcement front, Riyadh Cables Group Co. has completed the second phase of its share buyback program, designed to support its long-term employee stock incentive program.   

The buyback, which occurred between Oct. 31 and Nov. 30, 2023, saw the repurchase of 252,500 shares, amounting to SR18.89 million, at an average price of SR74.82 per share, as per the company’s announcement to Tadawul.  

This step is part of a 12-month plan that commenced following approval at the company’s extraordinary general meeting.

Following this phase, Riyadh Cables’ treasury now holds 282,500 shares, acquired at an average price of SR74.68 each.  

The company has indicated that this buyback process is not expected to have a significant impact on its financial results. This move aligns with Riyadh Cables’ strategy to invest in its workforce while ensuring the company’s continued financial stability and growth.  


Saudi-Vietnamese Joint Committee explores ways to boost trade

Saudi-Vietnamese Joint Committee explores ways to boost trade
Updated 07 December 2023
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Saudi-Vietnamese Joint Committee explores ways to boost trade

Saudi-Vietnamese Joint Committee explores ways to boost trade

RIYADH: Trade exchange between Saudi Arabia and Vietnam is on course to prosper following discussions in a ministerial meeting.  

The fifth Saudi-Vietnamese Joint Committee, taking place in the Asian country’s capital of Hanoi, saw the participation of the Kingdom’s Assistant Deputy Minister for Mining Enablement Abdulaziz Al-Ahmadi, Vietnam’s Deputy Minister of Industry and Trade Phan Thi Thang, as well as joint representatives from several government agencies.  

During the meeting, the two nations reviewed the trade volume between them and expressed their intent to enhance it, broadening the range of exchanged products.  

This aligns with both countries’ efforts in recent years to bolster economic and trade relations.  

During the talk, the officials also discussed implementing support initiatives to facilitate trade exchange by encouraging the exchange of trade missions and participating in the economic activities held in the two countries.

The meeting also shed light on ways to enhance relations and common interests in accordance with the economic, scientific, and technical cooperation agreement concluded in Hanoi on May 25, 2006.

Additionally, both sides discussed increasing the volume of investments in priority sectors between them and elevating partnerships in trade, exports, and investments.

As the assembly concluded, both nations pledged to continue working to develop bilateral cooperation in key areas, including foreign relations, trade, energy, and industry.

Additional sectors included investment, finance, development support, health, as well as education, training, human resources development, media, and justice.

Other areas of interest entailed culture and tourism, security and defense, science, technology and innovation, among others.

The Kingdom is a significant market for Vietnam and a vital partner in the Middle East and Africa.

The region’s exports to the Asian country during 2022 included plastic products, mineral products, and organic chemicals. They also entailed animal food and fish meat preparations.  

Meanwhile, Saudi Arabia’s imports from Vietnam included electrical appliances, equipment and their parts, and metal products. They also included copper and its products, shoes, machinery and tools.    

The Saudi-Vietnamese Joint Committee was established in 2006 to promote cooperation across various sectors for mutual development.


Central Bank of UAE’s assets rise 1.3% to $1.08tn

Central Bank of UAE’s assets rise 1.3% to $1.08tn
Updated 07 December 2023
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Central Bank of UAE’s assets rise 1.3% to $1.08tn

Central Bank of UAE’s assets rise 1.3% to $1.08tn

RIYADH: Total assets held by the Central Bank of UAE rose to $3.95 trillion dirhams ($1.08 trillion) by the end of September 2023, representing a 1.3 percent increase compared to the previous month.

According to CBUAE’s statistical monthly bulletin, this growth in assets was complemented by a 1.4 percent rise in the volume of bank credit, which went from 1.95 trillion dirhams at the end of August to 1.98 trillion dirhams at the end of September.

CBUAE revealed that the surge in bank credit in September was driven by a significant 7.3 percent surge in foreign credit and a modest 0.7 percent increase in domestic credit.

According to the central bank, the domestic credit increase was attributed to a 3.3 percent increase in the public sector, 3.8 percent in non-financial institutions, and a 0.2 percent increase in the private sector.

The report added that banking deposits hit 2.42 trillion by the end of September, representing a rise of 0.7 percent compared to August.

“The growth in total bank deposits was due to an increase in resident deposits by 1.8 percent, overshadowing the reduction in non-resident by 10.1 percent,” said CBUAE in the report.  

Additionally, CBUAE said the monetary base expanded by 0.4 percent from 595.1 billion dirhams in August to 597.3 billion dirhams by the end of September. The expansion included a 0.5 percent increase in issued currency and a significant 13.1 percent rise in the reserve account.

CBUAE added that the overall money supply indicators also witnessed growth in September. M1, which signifies the most liquid form of money, observed a rise of 2.2 percent to 795.5 billion dirhams in September compared to August, while M2, which includes M1 and also less liquid short-term time deposits, grew by 2.6 percent to 1.90 trillion dirhams during the same period.

M3, which comprises M2 and includes less liquid assets and large time deposits, grew by 1.6 percent month-on-month to 2.35 trillion in September.

Earlier this month, CBUAE and Bank Indonesia signed a memorandum of understanding aimed at expanding cooperation across various sectors.

The MoU entails the extension of the already established framework of cooperation between both central banks, which seeks to strengthen their relationship, enhance information exchange, and collaborate across various areas.