7 key initiatives announced by Saudi wealth fund in 2017

Saudi Arabia’s Public Investment Fund (PIF) moved to the forefront of the Kingdom’s investment strategy in 2017, signing a number of key deals at home and abroad. The fund, which is targeting annual returns of 8-9 percent by 2025-2030, is looking to boost its assets under management to SAR 1.5 trillion (over $400 billion) by 2020.

Argaam takes a look at some of PIF’s key activities over the course of the year.

Bolstering 2018 budget: PIF will support the budgeted expenditure for next fiscal year by serving as an alternative source of capital and investment spending. The fund has a projected spending of up to SAR 83 billion the next year, according to Crown Prince Mohammed bin Salman.

Real estate projects: In May, PIF and New York-based private equity firm Blackstone Group announced joint plans to create a $40 billion fund to invest in infrastructure projects, mainly in the US. PIF signed a MoU with Blackstone to commit an anchor investment of $20 billion to the fund. In October, the fund set up a mortgage refinancing company to boost Saudi citizens' home ownership rates, by offering the Ministry of Housing some SAR 75 billion in refinancing over the next five years, reaching up to SAR 170 billion by 2026.

Construction & contracts: PIF is said to be in the process of setting up a “super contractor” entity to undertake major infrastructure projects in the Kingdom. Saudi Aramco, PIF, a local contractor, and an international contractor, will each own a 25 percent stake in the new entity. The fund also planned to launch a new company, called Al-Haram Al-Makki Visions, to develop the Grand Mosque region. A similar company is planned for The Prophet's Mosque in Madinah.

An eye on entertainment: The fund targeted the entertainment sector by setting up an investment firm, with a startup capital of SAR 10 billion. Earlier this month, PIF signed a MoU with US-based AMC Entertainment Holdings Inc. to explore viable opportunities into the entertainment sector. The fund is also part of the sports and entertainment city project announced by Crown Prince Mohammed bin Salman in April.

Tourism: Crown Prince Mohammed launched in August the Red Sea Project, a 30,000 square kilometer coastline tourism project. Under the project, 50 islands will be developed as tourist destinations between Umluj and Al-Wajh coastal towns on the Red Sea. The first phase of the project is set to begin in Q3 2019. The fund is also redeveloping Jeddah Corniche into a mixed-use project, at an estimated cost of SAR 18 billion over ten years.

Vision Fund: The Vision Fund was launched with aim to boost technology investments on a global scale. The fund is pioneered by PIF and Japan-based SoftBank Group-led venture, and is supported by Abu Dhabi’s sovereign fund Mubadala Investment Co., tech giant Apple Inc., Qualcomm Inc., Foxconn Technology Group and Sharp Corp. The Fund has since signed a deal with Saudi Electricity Co. (SEC) to develop a new solar power plant. It also announced a robotics-focused initiative to improve the integration of robots in daily life.

NEOM: The $500 billion megacity project announced by Crown Prince Mohammed bin Salman in October, will be backed by PIF, along with local and international investors. Earlier this month, PIF appointed UK’s Buro Happold as program manager for the project.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com