Sovereign Wealth Funds in KSA and the GCC (total wealth approaching $4.0 TRILLION)

[ArabianEmpires&Caliphates]

Turning Inward: GCC Sovereign Wealth Funds Reinvent Themselves in the COVID Era​

SITUATION REPORTS - March 19, 2021
By Arman Sidhu

In a 2016 interview with Bloomberg, Saudi Crown Prince Mohammad bin Salman described a vision for the Kingdom’s post-carbon future, one that would channel the oil wealth into a vast and diversified portfolio of global equities and assets. Such a move would, in the words of the Prince, “technically make investments the source of Saudi government revenue,” therefore weaning the country off its oil dependence in an era of erratic oil prices and fickle OPEC+ politics.

Nearly five years later, and the emergence of similar state-led restructuring plans, often branded as “Visions,” have taken place across all 6 of the Gulf Cooperation Council’s (GCC) member-states. Through the establishment and growth of sovereign wealth funds, the trajectory of the GCC economies will increasingly rely upon 3 missions: 1) the performance of international investments; 2) regional expansion of non-oil conglomerates; and 3) the successful execution of ambitious infrastructure and stimulus projects designed to bolster non-oil sectors.

With over $3 trillion USD in assets under management (AUM) between them, the GCC’s 10 largest sovereign wealth funds remain formidable players in global markets and occupy 35% of the spots in the top 20 rankings of such funds. Such largesse was witnessed in the post-pandemic buying spree, where GCC sovereign wealth funds snapped up stakes in hard-hit industries like tourism and transportation, two sectors that the GCC countries look to as possible sources of economic diversification. This risk appetite was even bullish enough to warrant a $40 billion USD infusion into the Saudi Public Investment Fund (PIF) using the central bank’s foreign reserves. Just five months after the infusion, the Saudi Crown Prince announced that the PIF would inject double that amount into the domestic economy in 2021 and 2022.

Yet, amid low or even negative interest rates among advanced economies, coupled with steep valuations in many equity markets, the competition for yield among institutional investors has compelled many of them to take on riskier emerging market debt, and/or channel investment in expensive and illiquid alternatives like private equity placements and foreign property markets.

As perhaps the most poignant example, both the Saudi PIF, and Abu Dhabi’s Mubadala Investment Company collectively committed $60 billion USD to the Softbank Vision Fund, a much-vaunted venture capital fund concentrated on emerging technology firms. In spite of its hype, the fund suffered severe losses when some of its most reputable portfolio companies, like the coworking start-up WeWork, underwent sharp devaluations. Without a noteworthy domestic technology or life sciences sector to speak of, GCC states have few options beyond repatriating their investment capital in hopes that they can nurture their own “national champions” in the region.

One area in which the GCC economies have managed to sustain non-oil growth has been in the regional expansion and promotion of Gulf-based conglomerates. Though such firms are privately held, they typically maintain a connection to the state apparatus due to the composition of shareholders, including sovereign wealth funds. By engineering mergers and expanding through downstream investments across the MENA region, Gulf conglomerates, buttressed by the capital of sovereign wealth funds, are increasingly expanding their footprintthrough outward foreign direct investment in neighboring non-GCC states in sectors like construction, retail, agriculture, and telecommunications.

Although sovereign wealth funds typically search for and execute investments abroad, the concomitant shocks of the COVID-19 pandemic and vagaries in the energy market have forced some GCC member-states to rethink and reorient the mandate of these funds. With oil prices still anchoring government budgets, fiscal deficits among the GCC states are likely to become exacerbated in the absence of fiscal reform or more stable and diversified sources of public revenues.

Thus, the responsibilities charged to sovereign wealth funds are increasingly aligned with domestic policy priorities, particularly with the development of the private sector, and its ability to absorb labor from the bloated and expensive civil service positions that most GCC citizens hold and covet. The mismatch in compensation between the public and private sectors remains vast and untenable. In remedying this issue, policymakers have resorted to their standard playbook during downturns in oil markets, by drumming up private sector activity through state-sponsored infrastructure projects.

Trade-related infrastructure, “smart cities,” and tourist attractions each play recurring roles in the stratagem laid out by Gulf policymakers, which include a preponderance of decade(s)-long development plans. Saudi Arabia (Vision 2030), Qatar (Vision 2030), Bahrain (Vision 2030), Abu Dhabi (Vision 2030), Dubai (Industrial Strategy 2030), Kuwait (Vision 2035), and Oman (Vision 2040) each hint at the pressing need for economic reinvention, but the objectives in each plan remain lofty and ambiguous, with critics dismissing such initiatives as white elephant projects at scale.

Other policy signals, such as deportations of migrants and planned reforms of the notorious kafala system, which for decades enabled the import of cheap, low-skilled labor to satisfy manpower demands in sectors like construction and retail, suggest that most of the GCC states are planning a significant ascent in global value chains. Some of the most oft-cited sectors in GCC “Vision” documents include tourism, healthcare, media/entertainment, information technology, and transportation.

To realize such ambitions, the GCC states will still have to rely on foreign labor, albeit one that is high-skilled with the requisite technical expertise, in tandem with upskilling its own nationals. The region continues to be a significant source of international students for higher education institutions in the United States and Europe, but its own educational institutions have seen an influx in funding and could benefit from domestic injections by their sovereign wealth fund. Overcoming cultural biases against certain types of work, boosting female labor participation, and failed attempts to impose quotas of nationals employed by private firms, are each latent in the region’s struggle to retain its social conservatism and modern economic agenda.

Having succeeded in containing the human costs of the COVID-19 pandemic, the GCC states find themselves at a critical juncture that will determine the viability of their post-oil futures. The deferral of taxes for businesses and the drop in oil exports continue to strain already stretched public finances. Though politically contentious, austerity measures introduced during the pandemic point toward a more sustainable future for the GCC economies. With oil-based financial surpluses set to shrink in perpetuity, averting the long-dreaded “resource curse” will require a substantial push out of the Gulf’s comfort zone in its social, political, and economic domains.

*This article was originally published on January 18, 2021.

Turning Inward: GCC Sovereign Wealth Funds Reinvent Themselves in the COVID Era | Geopolitical Monitor

But the path to a post-oil future won’t be easy.

www.geopoliticalmonitor.com

Article from 2019 so a bit outdated, as the total worth is $4.0 trillion as of 2022.

Here are the top 10 sovereign wealth funds in the Arab world​

Here are the top 10 sovereign wealth funds in the Arab world

While the world’s largest SWF – which recently reported that its value had increased to $1.02 trillion despite global economic headwinds &ndash

english.alarabiya.net

Saudi wealth fund edges closer to green bond with Moody’s rating​

Last week, Fitch Ratings gave the fund a rating of A

BY BLOOMBERG
FEBRUARY 8, 2022

Saudi Arabia’s sovereign wealth fund has received the fifth-highest credit rating from Moody’s Investors Service ahead of its plans to tap the international bond market for the first time.

The A1 rating for the $500bn Public Investment Fund, which matches the agency’s sovereign rating on Saudi Arabia, “reflects its standalone creditworthiness” as well as its “very high level of interdependence” with the government and likelihood that the state would provide it with support if needed, Moody’s said in a statement on Monday.

While the fund has “indirect” exposure to environmental and social risks, its “portfolio is quite diversified and many of the sectors where PIF invests have low exposure to environmental and social risks,” Moody’s said.

The first-time rating is a further indication that the wealth fund is closing in on plans to sell its debut green bond as it looks to increase the role that environmental, social and governance principles play in its investments. Governor Yasir Al-Rumayyan said in September that the PIF was working on plans to issue a so-called green bond.

Moody’s rating “will further enhance our access to international capital markets and continue to diversify our sources of funding,” Al-Rumayyan said in a statement.

Last week Fitch Ratings gave the fund a rating of A, the sixth-highest investment-grade level, with a stable outlook – also the same grade it assigns for Saudi Arabia’s government. The fund plays a key role in Crown Prince Mohammed bin Salman’s plans to diversify the economy of the world’s largest crude exporter.

Fitch estimates that government cash injections to the fund over the past three years totaled $77bn.

“The government has an oversight over PIF, notably over its investment and funding strategies through its board of directors, which is chaired by the Crown Prince and governed by appointed Ministries and government officials,” the rating company said in a statement.

Saudi wealth fund edges closer to green bond with Moody’s rating

Last week, Fitch Ratings gave the fund a rating of A.

gulfbusiness.com

Public Investment Fund Grows, Bets Big on Tech​

Saudi Arabia’s Public Investment Fund continues to enjoy steady growth aided by technology-focused investments, but the sovereign wealth fund’s 2030 growth target remains distant.

Robert Mogielnicki Jan 12, 2022
Head of the Saudi Investment Fund, Yasir al-Rumayyan, speaks during Saudi 2022 Budget Forum in Riyadh, Saudi Arabia, December 13, 2021. (REUTERS/Ahmed Yosri)
Robert Mogielnicki
Senior Resident Scholar
Saudi Arabia’s Public Investment Fund is on track to meet its $480 billion target of assets under management for the second quarter of 2022, according to the fund’s governor, Yasir al-Rumayyan. The PIF plans to achieve the ambitious goal of approximately $1.07 trillion of assets under management by 2025 and $2 trillion in 2030. Smart investments in technology firms, many of which enjoyed booming stock prices since the coronavirus pandemic, can help support these growth ambitions. However, fund officials have their work cut out for them to foster the genuine wealth creation required to transform the country’s economy and sustain the economic well-being of citizens.
The PIF signaled a serious interest in global technology investments with its massive $45 billion commitment to the SoftBank Vision Fund, the world’s largest technology investment fund, in 2018. A more modest $1.3 billion investment in Lucid Motors by the PIF in 2018 was nevertheless worth $41 billion after three years, owing to a successful initial public offering by the electric vehicle maker. The Saudi fund’s strategy for 2021-25 reaffirms the significance of local and international technology firms in its investment portfolio.

A Fund Fit for the 21st Century​

Investments in local, Saudi technology firms serve to accomplish multiple PIF program objectives, including the need to “unlock new sectors” and “localize cutting-edge technology & knowledge.” Elm, a digital service firm wholly owned by the PIF, plans to market 30% of its shares on the Saudi stock exchange Tadawul. The PIF likewise owns 50% of the shares of noon, the Riyadh-based e-commerce marketplace and Middle Eastern competitor of Amazon. The Saudi Information Technology Company, which the PIF also owns, works to secure sensitive national infrastructure and information assets. In 2019, the PIF officially launched the Jada Fund of Funds to further support the development of the region’s private equity and venture capital ecosystem.
Fund officials hope that strategic investment partnerships will generate domestic dividends. There is some early evidence that this strategy is working in the technology domain. In September 2021, SoftBank led a $125 million financing round for Unifonic – the Japanese conglomerate’s first deal with a Saudi-based technology company. This investment process reflects the recycling of investment capital that is at the heart of many Saudi spending initiatives. However, the Unifonic deal was funded by SoftBank’s Vision Fund 2 and is a fraction of what the PIF committed to SoftBank’s first Vision Fund in 2018. Meanwhile, Lucid is reportedly planning to build an electric-vehicle factory in Saudi Arabia by 2025 or 2026.
The PIF holds stakes in promising technology firms from the world’s largest economies. Magic Leap, an augmented reality startup, secured$400 million from the PIF in 2018; the U.S.-based technology firm is reportedly planning to open a computing innovation center in Saudi Arabia through a partnership with Saudi Aramco. The Saudi sovereign wealth fund also invested $3.5 billion in Uber Technologies, which shook investor confidence in past years, but the U.S.-based mobility provider may be well positioned for a comeback in 2022.
Babylon Health, a British telemedicine company that offers virtual consultations with doctors and other app-based services, is one of the world’s fastest-growing health-care companies. The PIF’s 2019 investment in Babylon Health preceded the coronavirus pandemic and holds tremendous promise. The PIF also invested approximately $1.5 billion in Jio Platforms, a major telecommunications and digital service firm in India, and added shares of the Chinese multinational Alibaba Group Holding in the third quarter of 2021.
Sizeable investments in global technology firms do entail financial risks. The Chinese government’s crackdown on the country’s technology sector erased billions of dollars in value from Chinese technology stocks. The stock price of SoftBank Group fell steadily throughout the second half of 2021 – resting at $23.41 on January 10, 2022, down from $45.94 on May 10, 2021 – amid a broader sell-off of Asian technology stocks. Technology firms likewise face headwinds in the United States, where both Democrats and Republicans view reining in technology firms as part of their political agendas.
Technology is just one component of the PIF’s expansive portfolio, which also includes companies operating in tourism, hotels, power and desalination, physical retail, and even helicopter services. In this manner, the Saudi sovereign wealth fund balances a diversified pool of international investments alongside national investment initiatives. In December 2021, the PIF created the National Development Division to better support the kingdom’s economic and social development.

Reality’s Price Tag​

Scholars and analysts are increasingly asking whether and when Gulf sovereign wealth resources might serve as a substitute for proceeds from the oil and gas sector. These questions are worth raising with respect to the PIF, which lies “at the heart of Saudi Arabia’s rapid transformation.” Sustainable returns on investment can serve as key non-oil revenue streams over the long run, but they are unlikely to sustain the large Saudi state and its economy in the same fashion as oil proceeds. Norway’s $1.4 trillion sovereign wealth fund, the world’s largest, provides annual payouts worth only one-quarter of the state budget.
Despite its commendable growth, the PIF’s target of reaching $2 trillion in assets by 2030 seems unlikely. Of course, there are quicker ways for the fund to approach such an asset size in a nominal sense but without organic growth. Placing shares of Aramco – or the entire company – under the PIF’s corporate umbrella or boosting the valuations of local PIF-owned development projects are two such avenues. However, the distinction between reallocating investment capital and creating wealth has important implications for the economic well-being of average Saudi citizens. The former can look impressive on a balance sheet, but the latter produces societal impact.
The PIF is undoubtably an influential economic catalyst in the kingdom and beyond. Only time will tell if the Saudi sovereign wealth fund can become a sustainable economic engine.

Public Investment Fund Grows, Bets Big on Tech

Saudi Arabia’s Public Investment Fund continues to enjoy steady growth aided by technology-focused investments, but the sovereign wealth fund’s 2030 growth target remains distant.

agsiw.org

 

[ArabianEmpires&Caliphates]

Saudi Arabia’s Public Investment Fund assigned debut credit ratings​

State-owned $500bn fund prepares to raise public debt to fund spending and investment commitments

Saudi Arabia’s northwestern region, between Neom and al-Wajh: local investments, such as the futuristic city of Neom, made up 67 per cent of the fund’s portfolio as of December 2020. © AFP via Getty Images

Samer Al-Atrush in Riyadh and Simeon Kerr in Dubai FEBRUARY 7 2022

Saudi Arabia’s Public Investment Fund has been assigned debut ratings by agencies Fitch and Moody’s as the government-owned $500bn sovereign fund prepares to extend credit facilities and raise public debt to fund its massive spending and investment commitments at home and abroad.

Fitch Ratings issued PIF with a long-term default rating of A, with a stable outlook. Moody’s gave an A1 long-term rating baseline credit assessment. Both agencies issued their ratings based on the creditworthiness of the government of Saudi Arabia, which owns PIF and is very likely to support the sovereign wealth fund, if needed.

The ratings are a precursor to the fund potentially launching “green bonds” and extending $15bn in bank facilities as the PIF seeks to raise more debt, alongside tapping the kingdom’s oil revenues, to fund Crown Prince Mohammed bin Salman’s ambitious domestic development plans that aim to plan for a future beyond oil.

“PIF has evolved into becoming one of the kingdom’s main vehicles to grow the kingdom’s non-oil economy and reduce its reliance on the hydrocarbon sector,” Moody’s said. PIF had been mandated to expand its assets, unlock new sectors for the country, bring in cutting edge technology and build partnerships at home and abroad, it added.

Over the past five years, PIF’s assets under management have increased from $152bn in 2015 to $412bn in 2020. Moody’s said it expected the fund to grow further in the coming years. PIF’s current assets under management are estimated at around $500bn.

Fitch said government cash injections into PIF totalled $77bn over the past three years. It has also received other grants such as land transfers for domestic investments.

These local investments, such as the futuristic city of Neom, made up 67 per cent of the fund’s portfolio as of December 2020, Moody’s said. The fund has also been on an international acquisition drive, investing in businesses as diverse as electric vehicle manufacturer Lucid Motors and the Premier League football club Newcastle United.

“The rating reflects its standalone creditworthiness . . . combined with a ‘very high’ level of interdependence between the kingdom and PIF and a ‘very high’ likelihood of extraordinary support being provided to PIF from the Kingdom if ever required,” it added.

The fund had an “excellent” liquidity profile, with a net cash position of $45bn as of September 2021 and access to $15bn in credit facilities, Moody’s said.

The wealth fund, which is chaired by Prince Mohammed, is a driving force in the kingdom’s plan to diversify its economy beyond petroleum and hit green targets, including net zero emissions by 2060.

“PIF considers the renewable energy sector as one of its strategic sectors and is committed to develop 70 per cent of Saudi Arabia’s renewable energy target of 58.5 gigawatts by 2030,” Moody’s said.

The wealth fund’s diverse portfolio meant that many of its investments had low exposure to environmental and social risk, Moody’s said.

Saudi Arabia’s Public Investment Fund assigned debut credit ratings

State-owned $500bn fund prepares to raise public debt to fund spending and investment commitments

www.ft.com

I suspect that the usual Arabized anti-Arab suspects are burning from within and running out of Burnol. This is just the beginning.

@Titanium100 @The SC @Saddam Hussein

 

[The SC]

Saudi Crown Prince: 4% of Aramco shares to the investment fund is part of the kingdom's strategy..

Very excellent news now, the size of the fund will reach 10 trillion riyals by 2030 or ($2,665,382,300,000) almost 3 Trillion dollars ..

 

[Saddam Hussein]

That's peanuts for KSA as trump said

 

[ArabianEmpires&Caliphates]

Saudi Crown Prince: 4% of Aramco shares to the investment fund is part of the kingdom's strategy..

View attachment 815072

Very excellent news now, the size of the fund will reach 10 trillion riyals by 2030 or ($2,665,382,300,000) almost 3 Trillion dollars ..

Amazing.

That's peanuts for KSA as trump said

It feels good to be rich.

Meanwhile others in the region (a certain failed sanctioned and Arabized entity included) barely have bread to eat.