PIF funding to come from infrastructure investment, Aramco IPOs: Saudi Crown Prince

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Saudi Arabia’s Crown Prince Mohammed bin Salman gave further insight into how the Kingdom’s Public Investment Fund (PIF) plans to grow in value from $400 million to $1.1 trillion on Thursday.

The Crown Prince’s comments came after he previously announced a dramatic increase in funding for the PIF of the next five years on Sunday.

“Regarding the Public Investment Fund, I know that a lot of people are wondering how we will increase its assets from $400 million to $1.1 trillion, from 1.5 trillion riyals to 4 trillion riyals. Quite simply, there are a number of sources,” the Crown Prince said during a conversation with Senator Matteo Renzi, Former Prime Minister of Italy and member of the Board of Trustees.

“First, there are a lot of assets managed by PIF valued today at zero. These assets include the lands of NEOM, the size of Belgium, with a book value of zero at PIF. The land of Amaala project, also equal to the size of Belgium, has a book value zero. The land of the Red Sea project, also equal to the size of Belgium, has a book value of almost zero. The land of Qiddiya project in Riyadh, equal to half the size of Bahrain, has a book value of zero. There are tens of real estate assets that have a book value of zero at PIF. Once investments are injected there, this will reflect on the value of the asset itself, increasing it to over 1.5 trillion riyals. These assets exist and are owned by the PIF. So this is the first source,” the Crown Prince explained.

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Secondly, the PIF would be garner additional funding through more Aramco initial public offerings in the future, the Crown Prince said, with the cash transferred to the PIF and then “reinjected inside and outside of Saudi Arabia for the benefit of PIF.”

“The third source: There are huge privatization projects. The cash generated from these projects will be transferred to PIF, increasing the value of its assets. The fourth source: the natural growth of PIF projects and their reinvestments,” the Crown Prince added.

On whether the PIF could achieve its ambitious target of $1.1 trillion in assets, the Crown Prince said, “I do not think that is a difficult challenge. I believe the target will be met without a doubt. We will work to achieve this.”

The Crown Prince was speaking at the fourth edition of the FII summit, which has brought over 150 speakers together, some of which will be attending from hubs in Paris, Mumbai, Beijing, and New York, while others attend in person in Riyadh, Saudi Arabia. The event had previously been postponed from December last year due to the pandemic and has adopted a hybrid in-person-virtual format.

The speakers, of whom 60 will be attending in-person and 90 virtually, will discuss how the new rebirth of the global economy could be shaped despite the barriers imposed by the COVID-19 pandemic.

Established in 1971, the role of the PIF has changed significantly since the introduction of Saudi Arabia’s Vision 2030 back in April 2016. Vision 2030 envisions the fund controlling more than $2 trillion in assets, which would make it the largest SWF in the world.

Since the plan calls for the PIF to become a massive investment vehicle to help move the Kingdom away from its historic reliance on oil revenue, the fund has already made great strides to diversify its investments. The PIF has invested in many big-ticket projects and institutions, such as the Blackstone Infrastructure Fund, Virgin Galactic, and the Softbank Vision Fund.

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