25 Jul

How Saudi Arabia’s PIF Ranked Second Globally for Governance, Sustainability and Resilience (GSR)

Saudi Arabia’s Public Investment Fund (PIF) has achieved remarkable advancements. As documented in the 2024 Governance, Sustainability, and Resilience Scoreboard by Global SWF

  • Climbed to the 2nd position among 100 sovereign wealth bodies.
  • Achieved an impressive 96% assessment score, up from 92% last year.
  • Led globally in deploying fresh capital over the past five and a half years.
The PIF’s Strategic Evolution and Historical Context

The Public Investment Fund (PIF, or “the Fund”) was established in 1971 by a royal decree under H.R.H King Faisal bin Abdulaziz. The fund is a strategic investor, developer, and asset management vehicle, wholly owned by Saudi Arabia, focusing on diversifying the Kingdom’s economy and reducing its reliance on the hydrocarbon sector. 

In 2015, as a mechanism for realizing Vision 2030, the PIF’s oversight was moved to the Council of Economic and Development Affairs (CEDA) from the Ministry of Finance and is chaired by H.R.H. Crown Prince Mohammed bin Salman Al Saud.

In December 2022, the fund had a total AUM of SAR 1.7 trillion ($445 billion) based on standalone financials and about SAR 2.9 trillion ($778 billion) based on consolidated financials. In 2023, the PIF’s total AUM rose to approximately $925 billion.

Overview: The Public Investment Fund (PIF) global rankings among sovereign wealth funds (SWFs) over the past decade.
  • 2014: PIF ranked 31st globally among SWFs, with assets under management (AUM) of approximately $5.3 billion.
  • 2015: The Fund’s assets grew substantially to around $22.4 billion, helping it climb to the 27th position globally.
  • 2016: PIF’s AUM increased further, reaching $160 billion, moving it up to the 24th spot.
  • 2017: Continuing its growth trajectory, PIF’s assets grew to $224 billion, placing it 11th globally.
  • 2018: With assets at $300 billion, PIF advanced to the 10th position worldwide.
  • 2019: PIF’s AUM reached $320 billion, maintaining its 10th place globally.
  • 2020: The Fund’s assets increased to $400 billion, moving it up to the 9th position.
  • 2021: PIF’s AUM grew to $430 billion, securing the 8th position.
  • 2022: With assets at $607.4 billion, PIF ranked 6th globally.
  • 2023: PIF maintained its 6th position with a further increase in assets​.
  • 2024: PIF jumped to the 2nd position globally, with assets nearing $925 billion, and became the top-ranked SWF in the Middle East​.
PIF’s 2024 Key Highlights
Top Global Position

 The PIF’s ascent from the 6th to the 2nd position in just a year is a testament to their robust strategy and execution. Here are the key measures and steps taken to achieve this remarkable milestone:

Carbon Credit Auctions

PIF conducted the largest-ever voluntary carbon credit auctions, selling 3.6 million credits to international companies. This not only showcases their commitment to sustainability but also their innovative approach to market solutions for carbon reduction.

Green Bonds

PIF issued the first-ever century green bond, totaling $8.5 billion. This pioneering move not only secures long-term financing for green projects but also positions PIF as a leader in sustainable finance.

Net Zero Commitment

PIF was the first in the region to pledge net zero emissions by 2050. This bold commitment aligns with global climate goals and sets a high standard for other regional funds to follow.

Recent Strategic Investments by the PIF

Saudi Arabia’s Public Investment Fund (PIF) continues to solidify its global presence through strategic investments and partnerships. Here are some of the most notable recent deals:

Buyout Group Ardian and PIF Agree to a £3.3bn ($ ) Stake in Heathrow

The PIF, in collaboration with buyout group Ardian, has agreed to acquire a £3.3 billion stake in London’s International Heathrow Airport. This investment underscores the PIF’s strategy to diversify its portfolio by investing in critical infrastructure assets worldwide. 

Investment in China’s AI Efforts

The PIF has also ventured into the burgeoning field of artificial intelligence by investing in Dahua Technology to help in their initiative to create a rival to OpenAI. This strategic investment not only positions PIF at the forefront of technological innovation but also enhances Saudi Arabia’s role in the global tech ecosystem. By supporting China’s AI endeavors, PIF aims to foster technological advancements and economic cooperation between the two nations.

BlackRock’s $5bn Deal with Riyadh

In another landmark deal, BlackRock has announced the launch of BlackRock Riyadh Investment Management, or (BRIM) following a $5 billion agreement with Riyadh. The new investment firm will focus on various sectors, including infrastructure, technology, and energy, contributing to the Kingdom’s economic diversification goals.

Acquisition of 49% of Rocco Forte’s Luxury Hotel Chain

Rocco Forte Hotels is a British hotel group that owns and operates 14 hotels across Europe. Sir Rocco Forte is Chairman and Chief Executive, while Olga Polizzi is Deputy Chairman and Director of Design.

The PIF has acquired a 49% stake in Rocco Forte’s luxury hotel chain, further expanding its footprint in the global hospitality industry. This acquisition is part of PIF’s strategy to invest in high-end assets that offer substantial growth potential and align with the Kingdom’s tourism ambitions under Vision 2030. The partnership with Rocco Forte will enhance the luxury travel experience in Saudi Arabia and beyond.

Staveley to Sell Newcastle United Stake to PIF and Reuben Brothers

In a strategic expansion in the sports industry, Amanda Staveley is set to sell her stake in Newcastle United to the PIF and the Reuben Brothers. This move will consolidate the PIF’s ownership in the football club. This acquisition aligns with the PIF’s broader goals of diversifying its investment portfolio and leveraging global sports platforms to promote economic and social development.

The PIF’s Renewable Energy Initiatives

The PIF has announced the signing of three new agreements to localize the manufacturing and assembly of equipment and components needed for solar and wind power in Saudi Arabia. These agreements have been entered into by the Kingdom’s Renewable Energy Localization Company (RELC) – a fully owned PIF subsidiary – in alignment with the Saudi Ministry of Energy’s drive to localize the production of renewable energy components.

Joint Ventures to Boost Renewable Energy Localization

Vision Industries is an industrial development holding specialized in giga-scale investments in green industries and value chains.

  1. Envision Energy and Vision Industries: This JV involves the manufacturing and assembly of wind turbine components, including blades, with an estimated annual generation capacity of 4 gigawatts (GW). RELC will hold 40% of the JV, with Envision holding 50% and Vision Industries holding 10%.
  2. Jinko Solar and Vision Industries: This JV entails localizing the manufacturing of photovoltaic cells and modules for high-efficiency solar generation, with an annual production capacity of 10 GW. RELC will hold 40% of the JV, with Jinko Solar holding 40% and Vision Industries holding 20%.
  3. LUMETECH and Vision Industries: This deal will localize the production of solar photovoltaic ingots and wafers with an annual production capacity sufficient to generate 20 GW of power. RELC will hold 40% of the JV, with LUMETECH holding 40% and Vision Industries having 20%.
PIF: Fostering Expertise, Resilience, and Connectivity Across Saudi Arabia


National Industrial Development and Logistics Program (NIDLP)

Under the NIDLP, PIF is investing in industrial zones and logistics infrastructure across Saudi Arabia. These investments not only boost manufacturing capabilities but also strengthen the country’s resilience by reducing dependency on imports and fostering local production expertise.

National Automotive & Vehicles Academy (NAVA)

NAVA, supported by the PIF, is dedicated to training and upskilling Saudi youth in automotive technology and vehicle maintenance. This initiative aims to meet the growing demand for a skilled workforce in the automotive sector, thereby enhancing domestic expertise and resilience in transportation-related industries.

Healthcare and Pharmaceuticals

The PIF’s support for local pharmaceutical manufacturing initiatives, such as the joint venture with GSK (GlaxoSmithKline) to produce vaccines locally, is crucial for building resilience in pharmaceutical supply chains and developing expertise in vaccine production within Saudi Arabia.

Tourism and Hospitality Development

PIF’s developments in luxury tourism resorts like Amaala and NEOM are transforming Saudi Arabia into a global tourism destination. These projects not only attract international visitors but also nurture local hospitality expertise, enhancing resilience in the tourism sector.

Fostering Innovation

Technology and Innovation (KAUST)

The PIF’s partnership with King Abdullah University of Science and Technology (KAUST) supports research and innovation in advanced technologies such as AI, robotics, and renewable energy. This collaboration aims to build a robust ecosystem for technological innovation, fostering local talent and expertise in high-tech industries.

Spearheading Space Innovation: PIF’s Neo Space Group (NSG)

The PIF has launched Neo Space Group (NSG), a Venture Capital fund aimed at becoming a national champion in Saudi Arabia’s satellite and space sector. NSG will enhance local capabilities and support commercial satellite operations both locally and internationally, aligning with PIF’s strategy to unlock potential in emerging sectors.The group will invest in localization, technology, startups, and knowledge in satellite communications, earth observation, satellite navigation, and IoT.

This initiative underscores PIF’s commitment to fostering innovation and expertise in the global space economy.

Empowering Women: PIF and Women’s Tennis Association (WTA) Partnership

The PIF and the Women’s Tennis Association (WTA) have announced a groundbreaking multi-year partnership aimed at accelerating the growth of women’s professional tennis worldwide.

  • Key Highlights:
    • The PIF will be the first-ever naming partner of the WTA Rankings, symbolizing their commitment to women’s tennis and recognizing players’ achievements globally.
    • The partnership includes initiatives to support players at all levels and inspire youth participation in tennis, aligning with the PIF’s strategic pillars of inclusivity, sustainability, youth, and technology.
    • This collaboration follows the PIF’s earlier partnership with the ATP, marking PIF as the only global partner across both the WTA and ATP Tours.

  • The partnership reinforces the PIF’s role in promoting women in sport and enhancing the global reach and appeal of women’s tennis, exemplifying their dedication to fostering positive growth in sports worldwide.
Enhancing Halal Industry Capabilities: HPDC Invests in Believe
  • Investment Agreement: PIF-owned Halal Products Development Company (HPDC) has signed an agreement to invest in Believe, specializing in halal cosmetics and personal care products.
  • Objectives:
    • The agreement aims to localize Believe’s operations in Saudi Arabia, establishing it as a hub for exporting halal products globally.
    • HPDC plans to launch a manufacturing facility in Saudi Arabia, supporting local production and offering contract manufacturing services for both local and international brands.
  • Strategic Impact:
    • This move underscores PIF’s commitment to transforming global economies and enhancing the efficiency of the halal products sector.
    • By fostering research and development and creating employment opportunities, HPDC aims to advance Saudi Arabia’s Vision 2030 goals.
  • Vision 2030 Alignment: The partnership with Believe aligns with Saudi Arabia’s ambition to become a global leader in halal products, leveraging Islamic standards and local expertise.
 PIF’s Role in Sustainable Urban Development
  • Key Role: PIF is actively contributing to Saudi Arabia’s urban renaissance and economic diversification efforts under Vision 2030.
  • Diriyah Giga-Project: PIF’s involvement in the Diriyah giga-project is pivotal, showcasing 300 years of Saudi history and enabling strategic local sectors.
  • ROSHN Real Estate: PIF-owned ROSHN is supporting national goals to increase homeownership to 70% by 2030 through its real estate developments.
  • Investment in the Construction Sector: Earlier investments of USD 1.3 billion in leading local construction companies highlight PIF’s commitment to boosting the Construction, Building Components, and Services sectors.
  • Local Content Development: PIF aims to increase its subsidiaries’ spending on local content to 60% by 2025, promoting economic growth and sustainability in Saudi Arabia.
Financial Strength and Strategy

Asset Base and Funding

The PIF, which is currently (July 2024)managing around $925 billion in assets, as the vehicle to drive Saudi Arabia’s Vision 2030, which aims to diversify the economy away from oil dependence. The kingdom has financed the PIF through asset transfers and capital injections from the government. Notably, the PIF holds 16% of Saudi Aramco, providing a stable income stream from the $125 billion in annual dividends the oil giant pays out.

Revenue and Profitability

The PIF swung to a profit of 138.1 billion riyals ($36.81 billion) in 2023, after a loss of $15.6 billion in the previous year. Total revenues more than doubled to $88.3 billion in 2023, driven by improved investment activities, non-investment activities in sectors like banking, telecommunications, and gaming, and increased dividends. The fund made $25 billion in profit from investment activities last year, compared to a loss of $11 billion in 2022.

Borrowings and Investments

Total borrowings rose to $125 billion from $85 billion in 2022. The PIF’s portfolio includes diverse investments ranging from date farms to multinational conglomerates. The fund’s sources of funding include retained earnings from investments, capital injections from the government, government assets transferred to the fund, and loans and debt instruments.

Sustainable Investments

For the first time, investments in renewable energy have surpassed traditional fossil fuels. This shift underscores the PIF’s commitment to the global clean energy transition and sustainable growth.

 

The PIF’s dedication to fostering sustainable growth, supporting the global clean energy transition, and driving Saudi Arabia’s Vision 2030 is truly commendable. Their impressive leap to the 2nd position among global sovereign wealth funds showcases their strategic acumen and unwavering commitment to sustainability and financial resilience. We are proud to witness such impactful strides being made towards a more sustainable and prosperous future.

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