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Last month the chief of Saudi Arabia’s sovereign wealth fund struck the gong of the Hong Kong stock market. In doing so Yasir al-Rumayyan was not just marking the exchange’s opening that day, but also the kingdom’s ambitions in Asia. Having set up an office in Hong Kong in 2022, the Public Investment Fund would move to mainland China and India “hopefully, very soon”, he declared.
This was music to the Hong Kong authorities’ ears, more accustomed lately to foreign investors departing amid heightened tension between China and the west. It also capped a year of aggressive and contrarian investing by the PIF, whose enormous appetite has reshaped the world of sovereign wealth funds in the space of a few years.
In 2023, the fund chaired by Crown Prince Mohammed bin Salman spent $31.6bn, the most among its peers, according to data compiled by Global SWF. The Saudi fund dethroned Singapore’s GIC, which had topped the ranking for five consecutive years.
The PIF increased its spending by a third when everyone else retrenched: overall sovereign wealth funds invested a fifth less at $124.7bn, opting for prudence in a difficult macroeconomic environment. GIC halved its spending despite sitting on more than $140bn in “dry powder” — cash not yet invested.
The PIF also stood out for the size of its investments: of 49 last year, three were the largest in their industry. It spent $4.9bn on US gaming group Scopely in April, bought Standard Chartered’s aircraft leasing business for $3.6bn and took over the steel unit of Saudi chemicals group Sabic for $3.3bn. Other investments have included 8 per cent of Nintendo, 10 per cent of Heathrow airport and 49 per cent of UK hotel chain Rocco Forte.
The dealmaking is the result of a recent overhaul of the 53-year-old fund by Prince Mohammed. In 2015, he decided the PIF would drive the modernisation and diversification of the Saudi economy, with a view to prepare for peak oil and cater to the needs of the country’s young and restive 36mn-strong population.
The fund’s headcount has soared from 40 to 2,500 in just a few years and has stepped into almost all national economic spheres, engineering domestic consolidation from construction to sports to create new national champions.
“They are everywhere, they have become more professionalised,” said Ludovic Phalippou, professor at Oxford’s Saïd Business School, noting “the sheer size” of its ambitions.
Other funds in the region have been active: ADIA, Mubadala and ADQ in Abu Dhabi and Qatar Investment Authority made it to the top 10 by spending last year. But PIF’s mandate sets the fund apart.
Its risk appetite is higher. When its peers generally invest through third party fund managers, “PIF prefers to invest directly — mostly in strategically important areas of the Saudi economy — from football clubs, tourism and gaming . . . to construction and heavy industry,” said Diego López, head of Global SWF.
It is also in a hurry: the fund has a goal of increasing its assets under management to more than $1tn by the end of 2025 and $2tn by 2030, from about $700bn.
This model could result in some big losses. But its primary measure of success is not returns — it said it delivered 8 per cent per year by the end of 2022 — but size and domestic impact.
A “hybrid between a development fund and a private capital fund” is how a person close to the fund describes it.
While the PIF aims to hold three-quarters of its assets in the kingdom — these include Prince Mohammed’s five “gigaprojects” such as Neom, a development 30 times the size of New York in the Tabuk desert, plenty of cash remains for overseas deals. China will feature more, according to the person, to secure supplies such as solar panels or mining resources.
Increased activity will generate more scrutiny — and potentially hostility.
Western public opinions and some politicians have been wary of an autocratic regime snapping up assets around the world.
In December, the Spanish government said it would buy up to 10 per cent of Telefónica in response to a move by the PIF-owned STC to acquire a similar-sized holding. In June, news of talks between the PGA Tour and the PIF over a golf tie-up triggered negative reactions in Washington and investigations into antitrust and national security issues.
While this could cause headaches, Lopez says Prince Mohammed’s priority is “to put the kingdom on the map”.
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