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Saudis To Lift Sovereign Wealth Fund Assets To $400B By 2020

Riyadh

As it is trying to boost private-sector growth and diversify its economy away from crude oil, Saudi Arabia aims to make its Public Investment Fund (PIF) one of the world’s largest sovereign wealth funds and double its assets to US$400 billion (1.5 trillion Saudi riyals) by 2020.

The Saudis published the 2018-2020 program of PIG on Wednesday to detail the objectives in domestic and international investments and expected annual returns in each of the fund’s planned investment pools. The program is one of twelve realization programs part of the Vision 2030 plan to diversify the Saudi economy championed by Crown Prince Mohammad bin Salman Al-Saud.

“It also seeks to grow PIF into one of the largest sovereign wealth funds in the world, as well as to build strong economic partnerships to deepen and strengthen the impact and role of Saudi Arabia on the regional and global stages,” PIF’s program reads.

As of September 30, 2017, PIF’s assets stood at US$224 billion (840 billion Saudi riyals).

Moving forward, the initiatives are expected to raise PIF’s assets that are expected to generate between 4 percent and 5 percent in average annual total shareholder returns to 2020. Over the long-term, the fund has identified investment pools in six areas—Saudi equity holdings, Saudi sector development, Saudi real estate and infrastructure development, Saudi giga-projects, international strategic investments, and an international diversified pool. Each of the investment pools are expected to yield long-term returns of between 6.5 percent and 9 percent. 

In international investments, PIF plans to invest in fixed income, public equities, private equities, real estate and infrastructure, alternative investments (including hedge funds), and direct investments.

Related: This Oil Rally May Be Short-Lived

PIF is expected to receive part of the proceeds from the listing of 5 percent in Saudi oil giant Saudi Aramco currently planned for next year.

A few days ago, Aramco once again refuted reports of the past month that it could delay the listing of 5 percent of its shares in what is expected to be the biggest initial public offering ever, with Aramco’s chief executive Amin Nasser telling CNBC in an interview that the IPO is on track for the second half of 2018, as planned.

By Tsvetana Paraskova for Oilprice.com

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  • Naomi on October 25 2017 said:
    Saudi Arabia is running a $12 billion annual budget deficit. They borrowed another $15 billion for "investment". Fat chance Saudi Arabia can add to the sovereign wealth fund unless they provide birth control pills to Fatima. Saudi oil fields are going dry. USA opened up 6 million acres of oil and gas fields for exports. The price of oil is going down.

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