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Charles Kennedy

Charles Kennedy

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Saudi Wealth Fund Looks For $7 Billion Loan For ‘’Opportunistic Investments’'

The Public Investment Fund, the sovereign wealth fund of the world’s largest oil exporter Saudi Arabia, has contacted international banks for a loan of up to US$7 billion to use for new investments, Bloomberg reported on Thursday, citing sources with knowledge of the plans.   

The Public Investment Fund (PIF), as the wealth fund is officially known, aims to be one of the world’s biggest sovereign wealth funds through investments in and outside Saudi Arabia. It is also a key investment vehicle for the Saudi plan to diversify its economy away from oil.

The Saudi fund is now in contact with international banks for a revolving credit facility of between US$5 billion and US$7 billion, hoping the loan could be arranged early next year, according to Bloomberg’s sources. The proceeds from the loan will be used for opportunistic investments, the sources added.

The Saudi fund has made opportunistic investments in stocks of companies including Facebook and Citigroup during the equity market sell-offs driven by the pandemic in March this year. The PIF has since largely sold its stock in those companies, according to Bloomberg, and invested in utilities and materials exchange-traded funds (ETFs).

Last month, the Saudi fund bought 2.04 percent in India’s largest retailer Reliance Retail Ventures Limited for US$1.3 billion, months after pouring US$1.5 billion in Indian digital services company Jio Platforms.

The PIF “has become one of the major drivers of growth for the Saudi economy,” Saudi Crown Prince Mohammed bin Salman said in a speech last month, carried by the official Saudi Press Agency.

The fund is now worth US$346 billion (1.3 trillion Saudi riyal), the crown prince said, adding that the goal under Vision 2030 is to have the fund’s assets exceed US$1.866 trillion (7 trillion riyal).  

To compare, the world’s largest sovereign wealth fund currently is the Government Pension Fund Global of Norway, with US$1.1 trillion in assets.

At the same speech last month, Mohammed bin Salman said that the oil price collapse was depriving Saudi Arabia of US$27.5 billion in oil revenues this year, and admitted that the current oil income was not enough to cover the Kingdom’s salaries bill. 

By Charles Kennedy for Oilprice.com

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