PIF set to have $2 trillion in assets under management by 2030: report

PIF set to have $2 trillion in assets under management by 2030: report
In just eight years since its restructuring, the Saudi fund has become a dominant force both domestically and internationally, with the aim of advancing Vision 2030 and achieving the status of the world’s largest sovereign wealth fund by the end of the decade. (SPA)
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Updated 28 April 2024
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PIF set to have $2 trillion in assets under management by 2030: report

PIF set to have $2 trillion in assets under management by 2030: report
  • In March 2024, PIF’s assets under management surpassed $925 billion, up from $700 billion at the end of 2022

RIYADH: Saudi Arabia’s Public Investment Fund is poised to reach $2 trillion in assets under management by 2030, propelling it from 5th to 2nd place globally among sovereign wealth bodies, according to Global SWF.

The organization that monitors activity in this area stated that PIF’s rapid ascent can be attributed to the fund’s focus on  direct investments, emphasis on  key sectors of the Saudi economy, dedication to sustainability  through leading investments in  renewables and green assets, and active participation in the digital economy.

The institute’s 2024 annual report disclosed that in 2023, PIF took the lead as the top investor among all sovereign wealth funds, allocating $31.6 billion across 49 deals – a 33 percent increase from the prior year. 

This progress elevated the fund by 10 positions between global sovereign investors in new capital deployed within a mere three years.

In just eight years since its restructuring, the Saudi fund has become a dominant force both domestically and internationally, with the aim of advancing Vision 2030 and achieving the status of the world’s largest sovereign wealth fund by the end of the decade.

In March 2024, PIF’s assets under management surpassed $925 billion, up from $700 billion at the end of 2022, securing its position as the fifth largest global sovereign wealth fund, after the government transferred an additional 8 percent stake in Aramco to its portfolio.

The fund strategically delved into co-investments and forged joint ventures to bolster Saudi Arabia’s drive for economic diversification. 

Noteworthy examples include partnerships with mining giant Ma’aden, tire makers Pirelli, and car manufacturer Hyundai.

This was alongside an agreement with Baosteel and Aramco for the construction of a steel mill. 

The report highlighted that unlike numerous sovereign wealth funds that frequently choose co-investing as their primary strategy, both globally and in the Gulf region, PIF stands out with a strong preference for direct investments in private equity.

Specifically, it targets critical sectors of the Saudi economy, including sports and leisure, tourism, and gaming, as well as construction, and heavy industry.

Despite the clear advantages that co-investing offers – such as enhanced due diligence, favorable fee terms, and portfolio diversification – some sovereign investors may shy away due to concerns about deal visibility and relinquishing transaction control to other government funds.

According to the report, PIF stood out from other funds due to its substantial domestic investments, which significantly impacted its international investment capacity relative to other funds.

In 2023, Saudi Arabia’s sovereign wealth fund saw an 18 percent growth in its US equities portfolio, driven by rising stock values. 

PIF maintained a passive approach, keeping major positions unchanged. 

According to the report, its largest holding remained a 63 percent stake in Lucid Motors. 

PIF initiated its investment of $1 billion in the electric vehicle rival to Tesla back in 2018, and following Lucid’s initial public offering three years later has continued to infuse capital into the company.

This included an injection of $2 billion in June 2023, and Lucid is on course to commence EV production in Saudi Arabia by 2025.

PIF’s US-listed portfolio includes $8.1 billion in gaming companies such as Activision Blizzard, Electronic Arts, and Take-Two, reflecting the Kingdom’s plan to invest $38 billion to become a hub for this sector as part of Vision 2030.

In its report, Global SWF discussed the challenges encountered by sovereign investors in recent years and the corresponding solutions they implemented in 2023 to enhance the resilience of their portfolios.

One significant challenge involved addressing the decarbonization of the global economy. This was tackled through the introduction of a new sustainable investment strategy, shedding light on “climate alpha.” This typically refers to investments or strategies that aim to address global warming and its associated risks and opportunities.

This could include investments in companies or projects that are focused on renewable energy and efficiency, sustainable agriculture, clean transportation, and other environmentally friendly initiatives.

Sovereign investors showcased their dedication to sustainability during COP28, highlighted by the UAE’s launch of a $30 billion climate-focused fund, supported by BlackRock and fellow state-backed wealth funds. The goal is to access these areas while also greening existing black assets through de-carbonization.

Meanwhile, Saudi Arabia has taken a leading role in direct investments within the EV and automotive sectors. As well as its stake in Lucid, the Kingdom launched its own EV carmaker, Ceer, in a joint venture with Taiwan’s Foxconn. 

Further partnerships include collaborations with Tasaru for component localization, Hyundai for a car plant, and Pirelli for tire manufacturing.

According to Global SWF, sovereign investors directed a record $26.1 billion towards green assets in 2023, prioritizing investments in the energy transition, including renewables, battery storage, and EVs.

Gulf sovereign wealth funds contributed nearly half of this sum, leading the charge in driving the energy transition agenda.

The report also underscored another challenge encountered by sovereign funds, which is market volatility and the risks stemming from geo-economic fragmentation.

To tackle this issue, fund investors have embraced a more comprehensive total portfolio strategy. This strategy integrates alpha and beta return drivers, merging top-down and bottom-up analyses, with a significant emphasis on diversification.

By adopting this holistic approach, investors gain a thorough understanding of their investments, facilitating more informed decision-making, enhanced risk management, and the opportunity to optimize portfolio performance by focusing on the unique attributes and dynamics of each component within the portfolio.

The rise of disruptive artificial intelligence was also addressed in the report, which noted it represents a significant risk for sovereign investors as it can lead to rapid changes in industries, markets, and investment landscapes.

AI-powered technologies can impact traditional business models, alter consumer behavior, and introduce new competitive dynamics. To address this challenge, one proposed solution by sovereign investors is to integrate AI-powered portfolios into their investment strategies.

By incorporating AI technologies into portfolio management, sovereign funds can leverage advanced algorithms and data analytics to gain valuable insights. 

AI-powered portfolios can analyze vast amounts of data in real-time, identifying trends, patterns, and market signals that may not be immediately apparent to human analysts. This can lead to more accurate risk assessments, better market timing, and enhanced investment decision-making.

Additionally, AI can enable sovereign investors to automate certain aspects of portfolio management, such as rebalancing, trade execution, and risk monitoring. This not only increases operational efficiency but also allows for more agile responses to changing market conditions.

According to the report, 2023 saw sovereign wealth funds adjusting their real estate investments amidst concerns of global interest rate hikes and a potential property bubble.

Despite an overall softening in the market, some segments, such as data centers and affordable housing, saw growth as fund investors aligned with emerging megatrends. Data center investments surged by 150 percent to $7.6 billion in 2023, indicating a strong focus on future-oriented assets.

This shift reflects a move from traditional investments to a more sophisticated strategy, exemplified by PIF’s forming partnerships to develop data centers.

The report flagged up that in 2023, the GCC region – led by the Abu Dhabi Investment Authority, Abu Dhabi’s Mubadala, ADQ, PIF, and the Qatar Investment Authority – saw a record surge in sovereign capital to $4.1 trillion in assets under management, with transactions totaling $82.3 billion.

Projections indicate these sovereign wealth funds could reach $7.6 trillion in assets by 2030. This growth, according to the report, is fueled by high oil prices and a maturing investment landscape, driving economic diversification with growth forecasts of 3.6 percent and 3.7 percent for GCC nations in 2024 and 2025.

In this region, two distinctive sovereign wealth fund management approaches were highlighted by Global SWF. 

Abu Dhabi’s strategy involves the establishment of multiple SWFs, each with specific missions overseen by different royals. Saudi Arabia, on the other hand, centralizes its investment and strategic efforts under PIF, aligned with the government’s overarching vision.

Further, its leaders have no problems in announcing grand plans for the fund, using it in its name to buy football clubs or golf leagues, and in sharing its finances publicly given its fundraising efforts, in a rather refreshing fashion, the report said.

The institute presented updated projections in the State-Owned Investors 2030 section, factoring in the industry’s recovery in assets under management in 2023. 

It anticipates that public pension funds and central banks will reach $54.9 trillion by 2025 and $71 trillion by 2030. By then, Norway’s Norges Bank Investment Management, Saudi’s PIF, and Japan’s Government Pension Investment Fund could lead the table with over $2 trillion in assets under management each.


Global AI Summit in Riyadh to host top-level discussions on AI impact 

Global AI Summit in Riyadh to host top-level discussions on AI impact 
Updated 21 July 2024
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Global AI Summit in Riyadh to host top-level discussions on AI impact 

Global AI Summit in Riyadh to host top-level discussions on AI impact 
  • The event, organized by the Saudi Data and AI Authority, will focus on one of today’s most pressing global issues — AI technology

RIYADH: Saudi Arabia will welcome economic policymakers, major technology and artificial intelligence companies, international thought leaders, and heads of international organizations to Riyadh this September as the Global AI Summit returns for its third edition.

The event, organized by the Saudi Data and AI Authority, will focus on one of today’s most pressing global issues — AI technology — and will attempt to find solutions that “maximize the potential of these transformative technologies for the benefit of humanity,” a statement released Sunday said.

The third edition of the event will be held at the King Abdulaziz International Conference Center from Sept. 10 to 12 under the patronage of Saudi Crown Prince Mohammed bin Salman in his capacity as chairman of the board of directors at SDAIA, the statement added.

The GAIN Summit will take place amid increasing concerns about the impact of AI technologies and will reaffirm the Kingdom’s commitment to supporting international efforts aimed at enhancing human welfare in the face of the challenges associated with developing technology.

GAIN 2024 will focus more on AI than its previous editions in 2020 and 2022, with topics including innovation in the sector, key developments shaping a better future for AI, and fostering a supportive environment for human resources in the field.

Other topics include AI at local and global levels, the complementary relationship between humans and AI, business leaders in AI, the relationship between data and applications, GenAI, AI ethics, AI processors and infrastructure, and AI and smart cities.


Saudi industry minister to visit Brazil, Chile to explore lithium production

Saudi industry minister to visit Brazil, Chile to explore lithium production
Updated 21 July 2024
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Saudi industry minister to visit Brazil, Chile to explore lithium production

Saudi industry minister to visit Brazil, Chile to explore lithium production
  • Alkhorayaf will land in Brazil on Monday and leave for Chile, the world’s second-largest producer of lithium, next Sunday

RIYADH: Bandar Alkhorayaf, Saudi Arabia’s mining and industry minister, will visit Brazil and Chile this week, the ministry said on Sunday.

In Brazil, he will hold meetings with officials to discuss expanding the Kingdom’s mining capacity, food processing, and aviation, while in Chile he will explore lithium production, needed for electric vehicle batteries.

“This aligns with the Kingdom’s direction towards expanding the production of EVs,” a Saudi government statement said. 

Alkhorayaf will land in Brazil on Monday and leave for Chile, the world’s second-largest producer of lithium, next Sunday.

On the first leg of the tour in Brazil, Alkhorayaf will meet agricultural and industrial groups, including Minerva Foods, JBS, and BRF SA, as well as the Brazilian Mining Association and mining company Vale.

Brazil’s Energy Minister Alexandre Silveira said last month that Saudi Arabia’s Public Investment Fund plans to invest $15 billion in Brazil in areas such as green hydrogen, infrastructure, and renewable energy.

In Chile, the minister will meet his counterpart Aurora Williams, as well as mining companies Antofagasta, and Codelco, a state-run company tasked with bringing the Chilean government into the lithium industry.

Saudi Arabia’s sovereign wealth fund, the PIF, and the Kingdom’s mining company, known as Ma’aden, which is 67 percent owned by the PIF, formed a joint venture called Manara Minerals to invest in mining assets abroad.


Closing Bell: Saudi main index closes in green at 12,195  

Closing Bell: Saudi main index closes in green at 12,195  
Updated 21 July 2024
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Closing Bell: Saudi main index closes in green at 12,195  

Closing Bell: Saudi main index closes in green at 12,195  

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Sunday, gaining 6.73 points, or 0.06 percent, to close at 12,195.05.   

The total trading turnover of the benchmark index was SR6.12 billion ($1.63 billion), as 74 of the listed stocks advanced, while 154 retreated.   

The MSCI Tadawul Index also closed in green, gaining 2.46 points, or 0.16 percent, to close at 1,529.46.   

The Kingdom’s parallel market Nomu rose 67.8 points, or 0.26 percent, to close at 25,770.14. This comes as 27 of the listed stocks advanced while as many as 34 retreated.   

The best-performing stock of the day was Saudi Manpower Solutions Co., whose share price surged 9.88 percent to SR10.34. 

Other top performers include Maharah Human Resources Co. as well as Al-Baha Investment and Development Co., whose share prices soared by 8.35 percent and 8.33 percent, to stand at SR6.88 and SR0.13, respectively.   

The worst performer was Electrical Industries Co., whose share price dropped by 5.51 percent to SR6.00.    

Other notable declines included Alinma Hospitality REIT Fund and The Mediterranean and Gulf Insurance and Reinsurance Co., with share prices falling 3.38 percent to SR8.29 and 3.25 percent to SR29.80, respectively. 

On the announcement front, Saudi Tadawul Holding Co. reported a profit increase to SR146 million for the second quarter of 2024, reflecting a 55 percent rise from SR105.2 million in the same period last year.  

The company attributed this growth to a 50.3 percent increase in operating revenues, which reached SR741.1 million in the first half of 2024, up from SR493.0 million in the corresponding period of the previous year. 

According to a release on the bourse, Saudi Arabian Amiantit Co. reported a net profit of SR5.11 million for the second quarter of 2024, reversing a net loss of SR10.08 million from the same quarter last year, marking a 150.7 percent improvement.  

This positive shift was attributed to a 17.4 percent increase in revenue due to expanded sales and a higher volume of new orders. 

Kingdom Holding Co., Sumou Holding Co., and Jeddah Economic Co. have signed an agreement to establish a new SR6.8 billion fund to acquire the Alinma Jeddah Economic Fund, currently fully owned by Jeddah Economic Co. Kingdom Holding Co. will hold a 40 percent stake in the new fund. 


Saudi Arabia’s US treasury bond possession increases 22.46% year-on-year to $136.3bn

Saudi Arabia’s US treasury bond possession increases 22.46% year-on-year to $136.3bn
Updated 21 July 2024
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Saudi Arabia’s US treasury bond possession increases 22.46% year-on-year to $136.3bn

Saudi Arabia’s US treasury bond possession increases 22.46% year-on-year to $136.3bn

RIYADH: Saudi Arabia’s possession of US treasury bonds increased to $136.3 billion in May, compared to $111.3 billion for the same month in 2023.

The figures mark a 22.46 percent year-on-year increase.

Data released by the US Treasury Department placed Saudi Arabia in 17th spot among the largest investors in such financial instruments in May.

The report revealed that the Kingdom held bonds valued at $135.4 billion in April, compared to $135.9 billion and $131.1 billion in March and February, respectively.

The figures illustrate Saudi Arabia’s growing influence in international financial markets, highlighting a keen understanding of leveraging sovereign wealth to secure and strengthen the Kingdom’s global economic position.

Moreover, Saudi Arabia is the only Arab and Middle Eastern country among the top 20 major holders of US Treasury securities.

A report published in January by the Saudi Central Bank, also known as SAMA, revealed that its investments in foreign securities stood at $1 trillion at the end of December 2023.

SAMA also has $361.75 billion as deposits with banks abroad, the report added.

The data analysis also revealed that Japan emerged as the largest investor in US bonds in May, with holdings totaling $1.128 trillion. China and the UK followed, with portfolios valued at $768.3 billion and $723.4 billion, respectively. 

Luxembourg claimed the fourth spot with assets valued at $385.4 billion, while Canada and the Cayman Islands secured the fifth and sixth positions with treasury portfolios worth $354.5 billion and $336.5 billion, respectively. 

Ireland attained seventh spot with treasury reserves worth $317.7 billion, followed by Belgium and Switzerland, with assets amounting to $313 billion and $290.4 billion, respectively.

France held the 10th position with treasury assets amounting to $283 billion, while Taiwan and India occupied 11th and 12th places with portfolios worth $263.3 billion and $237.8 billion, respectively.

The data collected is primarily from US-based custodians and broker-dealers. Since American securities held in overseas accounts may not be attributed to the actual owners, the department said, the data may not provide a precise accounting of individual country ownership of treasury securities.


Saudi capital market systems prove resilient during global tech outage

Saudi capital market systems prove resilient during global tech outage
Updated 21 July 2024
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Saudi capital market systems prove resilient during global tech outage

Saudi capital market systems prove resilient during global tech outage

RIYADH: Saudi Arabia’s capital market systems proved resilient during the global technical outage on July 19, which disrupted flights, broadcasting services, and essential services worldwide. 

The Saudi Capital Market Authority stated that it promptly coordinated with market stakeholders to mitigate the effects of the interruption, ensuring that operations remained unaffected.  

According to the CMA, its systems were fully operational and prepared to support investors during the trading sessions on July 21.

The outage, triggered by a software update from cybersecurity firm CrowdStrike, caused widespread disruptions across various sectors. 

In response, the CMA directed listed companies on the Saudi capital market to disclose any significant developments related to the incident. The market regulator emphasized that its technical teams are monitoring systems around the clock to ensure ongoing stability and business continuity. 

The Saudi Exchange also reassured investors of its system’s reliability and readiness to provide continuous service. 

On July 20, Saudi Arabia’s National Cybersecurity Authority stated that the impact of the outage on the Kingdom was limited. The authority also noted that it has implemented exceptional measures to monitor threats and cyber risks and to respond to any incidents. 

The Saudi Central Bank confirmed that its payment and banking infrastructure remained unaffected by the outage, emphasizing its adherence to international cybersecurity and operational standards.  

The apex bank also highlighted its commitment to regularly updating precautionary measures to ensure effective business continuity and the resilience of its banking and payment systems. 

The Saudi Data and Artificial Intelligence Authority also stated that its systems and those it hosts in the Kingdom were not impacted by the global technical failure. 

“SDAIA confirms that its systems and the national systems hosted by it in the Kingdom are not affected by the technical failure that struck most countries of the world today,” it stated in a statement posted on X. 

The incident has sparked renewed discussions about the importance of cybersecurity and resilience in critical infrastructure, with many organizations reassessing their strategies and safeguards to prevent future disruptions.

The Kingdom’s Vision 2030 underscores a robust commitment to advancing cybersecurity, with strategic investments aimed at enhancing digital infrastructure and safeguarding national assets against emerging cyber threats.