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Saudi Arabia’s sovereign wealth fund plans to further scale back the share of its international investment, drawing a line under a multibillion-dollar global spending spree as it refocuses on the domestic economy.
The Public Investment Fund, which has about $930bn worth of assets, said it intended to cut the proportion of funds invested overseas to between 18 and 20 per cent, down from 21 per cent today and a high of 30 per cent in 2020.
PIF governor Yasir al-Rumayyan told the Future Investment Initiative conference in Riyadh on Tuesday that a decade ago most of the fund’s investments were domestic Saudi projects.
“But then [the proportion of international investments] increased from 2 per cent all the way up to 30 per cent,” he said. “Now our target is to bring it down to a range between 18 to 20 per cent.”
He added that “the absolute dollar amount is still growing . . . The dollar amounts are increasing” as the fund has set a target of hitting $2tn assets under management by 2030.
The allocation shift is a sign of the PIF’s ambition to divert more of its firepower towards a domestic economy facing a decline in oil revenues. As Saudi Crown Prince Mohammed bin Salman looks to reprioritise the kingdom’s spending, the PIF has come under pressure to deliver financial returns, while also meeting commitments to domestic projects.
The PIF has already been putting more conditions on mandates for fund managers, telling them it wants to see more investment in Saudi Arabia if it is going to commit money, bankers told the Financial Times earlier this year.
Rumayyan said on Tuesday that international investors who had previously sought funding from the PIF were also shifting their approach.
“We’re more focused on the domestic economy and we’ve been achieving and doing so many big things,” he said. Now, he added, there were more “calls for co-investments” with the PIF instead of “people who want us to invest or take our money”.
The change follows a decade in which a string of high-profile deals, including pumping $45bn into SoftBank’s Vision Fund in 2016 and $20bn into a Blackstone infrastructure fund the following year, turned a once sleepy state holding company with $150bn of assets into one of the Gulf’s most active sovereign wealth funds.
The fund has this year reduced its holdings in US-listed companies, selling down its stake in BlackRock and disposing of its holdings in Carnival, the cruise liner company, and entertainment group Live Nation.
According to filings at the US Securities and Exchange Commission, the PIF’s traded stocks in the US fell from about $35bn at the end of 2023 to $20.5bn on March 31, before stabilising in the second quarter at $20.6bn.
It has also scaled back its investments in international sports, which have included the acquisition of English Premier League club Newcastle United and bankrolling ventures such as the LIV Golf professional tour.
Rumayyan did not say when the PIF aimed to meet its new target for international investments.
Saudi executives and foreign bankers say the kingdom’s ambitions have not diminished as the PIF pushes ahead with projects such as Neom, a futuristic $500bn development along the Red Sea coast, and prepares to host a string of international events, including Expo in 2030 and the Fifa football World Cup in 2034.
But a new realism has taken hold, they say, with government departments tightening belts and some projects being scaled back or phased out.
This article has been updated to correct the PIF’s current overseas allocation
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