Saudi’s Public Investment Fund has emerged as the top global sovereign wealth fund investor in 2023. The PIF invested a remarkable $31.6 billion across 49 deals, which was a 33% increase from 2022.
The PIF overtook Singapore’s GIC, which was the top investor in 2022.
The PIF’s diverse portfolio, spanning aviation, sports, gaming, electric vehicles, and luxury hotels, aligns with Saudi Vision 2030 goals to diversify the economy from oil.
Overview of Sovereign Wealth Funds
Sovereign wealth funds (SWFs) are state-owned investment funds or entities created from national government surpluses. They are designed to invest globally in various sectors, aiming to achieve long-term returns.
The investments range from real estate, stocks, bonds, gold, or silver to investment funds or private equity.
The Rise of The PIF
The PIF’s journey to becoming the most active global sovereign wealth fund in 2023 is remarkable. The fund successfully outperformed Singapore’s GIC, the leading investor of 2022, demonstrating the PIF’s strategic investment approach.
In just eight years since its reformation, the PIF has grown into a powerful entity, not just within Saudi Arabia but also on a global scale. The fund’s objective aligns with the ambitious Saudi Vision 2030, aiming to become the largest SWF globally by the end of this decade.
PIF as A Powerhouse
The PIF’s investment strategy and activities have positioned it as a driving force in Saudi Arabia’s economic diversification efforts. The fund holds stakes in public and private companies, including tech giants like Meta and Alphabet.
Domestically, the PIF contributes significantly to enhancing strategic sectors including tourism with giga projects such as NEOM and Red Sea Global, creating a more robust and diversified economy. Its investments support innovation, human capacity, and technology, fostering an environment that promotes private sector growth.
Internationally, the PIF seeks strategic assets that provide substantial long-term financial returns and promote Saudi Arabia’s economic transformation. The fund’s overseas investments are geared towards sectors such as technology, entertainment, and renewable energy, among others.
Impact on the US Equities Market
In 2023, the PIF’s portfolio in US equities grew by 18%, primarily due to the increase in the value of existing stocks. Half of the PIF’s US-listed portfolio is in the consumer segment, including an $8.1 billion investment in gaming companies Activision Blizzard, Electronic Arts, and Take-Two.
The ‘Oil Five’
Alongside the PIF, four other Gulf funds – the Abu Dhabi Investment Authority, Mubadala Investment Company, ADQ, and Qatar Investment Authority – are among the top 10 dealmakers in 2023.
These funds, referred to as the “Oil Five,” have continued to gain market share and drive SWFs’ activity globally despite a drop in deals by Singaporean funds.
With assets worth $276 billion, Mubadala is also significantly boosting investments in various sectors worldwide. Last year, it invested in the US-based Aligned Data Centres, expanding its global digital infrastructure portfolio.
Reaching New Heights
In 2023, the assets under management of SWFs in the Gulf Cooperation Council (GCC) reached a historical peak of $4.1 trillion. Despite being lower than in 2022, the investment activity amounted to $82.3 billion, led by the “Oil Five.”
These sovereign investors are also increasing investments in green assets, setting a new record of $26.1 billion. Gulf SWFs are responsible for nearly half of this figure, exemplifying their commitment to sustainable investments.
A Look To The Future
The governments of the UAE, Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain are expected to control about $4.4 trillion in gross foreign assets by the end of 2024. It’s projected that sovereign wealth funds will manage two-thirds of this sum.
With the region witnessing a surge in energy prices in 2022, most Gulf governments experienced strained budgets. However, the region’s sovereign funds rose to prominence, becoming a more significant source of cash for global deals.
The PIF’s Investments
The PIF’s diverse investment portfolio spans several sectors, including aviation, sports, gaming, electric vehicles, and luxury hotels. This strategic diversification aligns with the goals of Saudi Vision 2030, steering the nation’s economy away from its dependence on oil.
In a recent development, the fund agreed to buy a 49% stake in Rocco Forte Hotels, estimated to value the luxury group’s properties at about £1.2 billion ($1.52 billion). This investment is part of PIF’s strategy to expand its luxury hospitality portfolio and help the group grow worldwide.
In another significant move, it acquired Standard Chartered’s aircraft leasing division via AviLease in a $3.6 billion deal. By gaining control over Standard Chartered’s aircraft leasing division, Saudi Arabia is set to become a formidable player in the international aircraft leasing sector.
Furthermore, to highlight the PIF’s growing interest in the automotive sector and align with its broader economic diversification initiatives, the PIF increased its stake in the British luxury car maker Aston Martin to 20.5%, demonstrating its intent to expand in the automotive sector.
Additionally, to expand its influence in the global aviation sector and boost Saudi tourism globally, The PIF has agreed to acquire a 10% stake in the United Kingdom’s Heathrow Airport from its holding company, TOPCO.
To redefine the MMA landscape in Saudi Arabia and the broader MENA region, PIF-backed SRJ Sports Investments has made its first investment by acquiring a $100 Million Stake in the Professional Fighters League (PFL).
To deepen the manufacturing sector, Saudi Arabia’s Public Investment Fund has acquired a 25% stake in Alkhorayef Petroleum, which is important in the region’s oil and gas production.
As the fund continues to make strategic investments and diversify its portfolio, it’s not just advancing toward its goal of becoming the world’s largest SWF by 2030.
A New Era
The PIF’s success in 2023 symbolizes a new era for Saudi Arabia and the GCC region. The PIF’s journey is a testament to the power of strategic investment and innovation. It demonstrates that it is possible to create a future defined by progress, growth, and diversification with ambition and foresight.