How Saudi Arabia Is Building Its Post-Oil Future With a $600 Billion Fund

In a world where deep-pocketed investors are becoming harder to find, Saudi Arabia’s $600 billion sovereign wealth fund is spreading around the oil-rich kingdom’s largesse as never before.

The Public Investment Fund has snapped up sports teams and electric carmakers and funded new cities in the desert as it seeks to amass $2 trillion in assets by 2030. Whether all these investments earn a big return is beside the point. The fund’s ultimate goal is to diversify the kingdom’s oil-reliant economy and project Saudi influence around the world.

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What was once a sleepy government holding company is now a vehicle for the global ambitions of the country’s de facto ruler, Crown Prince Mohammed Bin Salman, under a plan known as Vision 2030. Its main purpose is to stimulate inward investment, access new technologies, develop local industries and address widespread underemployment in the kingdom. One focus is tourism: In a country that until recently was largely closed off to foreign holidaymakers and entertainment was a taboo, PIF is investing in luxury resorts, cinemas and entertainment complexes to lure more tourists, and to stop Saudis seeking fun abroad. It also does deals just to make money. The fund is expanding its team in New York to manage a growing portfolio of US stocks.

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The Saudi Public Investment Fund (PIF) is gradually reducing its legacy holdings in local businesses such as Saudi National Bank and Saudi Telecom Co. to free up money for other investments. These include national projects like Neom, a $500-billion city-state that would run entirely on renewable power and export green energy. Since 2016, when it committed $45 billion to SoftBank Group Corp.'s technology-focused Vision Fund, PIF's foreign interests have also mushroomed. An investment in electric carmaker Lucid Motors Inc. has increased in value to almost $10 billion and the company is opening a factory in Saudi Arabia. The fund also has stakes in video game makers Activision Blizzard Inc. and Electronic Arts Inc. as well as the digital services and retail businesses of Asia's richest man, Mukesh Ambani.

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While traditional sovereign funds invest excess national wealth to generate profits in the future, the Public Investment Fund of Saudi Arabia (PIF) was repurposed as a global investor while the Saudi budget was in deficit. As a result, it has also turned to borrowing in order to hit its growth targets, which will require it to spend prolifically on development projects at home. It has already tapped global banks for multi-billion-dollar loans. In 2022, it raised $3 billion from its debut green bond sale.While it may seem incongruous for a petrodollar-backed fund to be raising money from climate-conscious investors, the PIF is the main backer of most of the kingdom’s renewable energy investments. Through Neom, it is funding one of the world’s largest projects to produce hydrogen fuel without creating any harmful emissions.

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Saudi Arabia's economy has grown rapidly in recent years, making it the sixth-largest economy in the world. The country's oil and gas reserves are a major contributor to its economic success, and it has also diversified its economy to include sectors such as manufacturing, agriculture, and tourism. Saudi Arabia is a major player in the global economy and is poised for continued growth in the years ahead.

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Since 2015, the fund's assets have grown four-fold to over $600 billion. Prince Mohammed wants it to oversee $2 trillion in assets by 2030, which would make it bigger than Norway's sovereign fund, currently the world's largest at around $1.4 trillion. The path to $2 trillion will involve more large asset transfers from the state. The fund has also been a major recipient of undeveloped land, which has zero value on paper. If this land is used for building, its value can increase dramatically.

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In 2021, PIF decided to invest in LIV Golf, an attempt to build a rival tournament to the PGA. It also considered making a bid for Formula 1 motor racing in late 2022. PIF’s investments in sports and competitive gaming and moves to bring major sporting events — and stars like Cristiano Ronaldo — to the kingdom are partly an attempt to boost Saudi soft power. Critics say such deals are “sportswashing,” an attempt to improve the nation’s image and divert attention from a poor human rights record. Saudi Arabia may be following the playbook of neighboring Abu Dhabi, whose Sheikh Mansour bin Zayed Al Nahyan bought another English club, Manchester City, in 2008 and used it as a platform to market the emirate and its state-owned companies around the world.

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Governor Yasir Al-Rumayyan, a close ally of Prince Mohammed, manages the fund’s day-to-day operations. MBS, as the ruler is also known, serves as chairman of the PIF and of most of its companies, including Neom. Some Saudi company executives have raised concerns, saying they felt crowded out by an entity so rich and connected that few can compete. The Crown Prince’s influence can be seen in some of the PIF’s deals that appear to be politically motivated, such as its backing of funds set up by former US Treasury Secretary Steve Mnuchin and Jared Kushner, the son-in-law of former President Donald Trump who served as a senior White House adviser under his administration. One of the PIF’s biggest overseas deals — a $45 billion investment in SoftBank’s first Vision Fund — was brokered after a brief meeting between Masayoshi Son and Prince Mohammed. The PIF says all of its board members play an important role in decision-making.