Banking & Finance

PIF appoints investment chief as it shifts focus to local projects

July 24, 2024, 12:59 PM

PIF's Fahad AlSaif. The fund is 'becoming more domestically oriented', analysts say

Fahad AlSaif to take dual role at fund
Will remain head of capital finance
PIF’s assets stand at $978bn

Saudi Arabia’s Public Investment Fund has appointed a head of investments as it seeks to manage funding challenges for the giga-projects at the centre of the country’s economic transformation programme.

Fahad AlSaif will be responsible for “guiding the development of PIF’s overarching investment strategy” and helping the fund’s leadership in its decisions, a statement said.

AlSaif will continue as head of PIF’s global capital finance division. The dual role appears to mean he will supervise both incoming and outgoing capital at the fund.

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PIF has $978 billion of assets under management, according to data tracker Global SWF, making it one of the world’s biggest sovereign wealth funds. However, oil output cuts and low levels of foreign direct investment have slowed down Saudi Arabia’s Vision 2030 project.

The fund has shifted strategy in response. Direct PIF investment for many of the 168 projects the fund cited in its 2023 financial report has been trimmed back, as developments are stretched out over a longer period.

PIF has saved at least $15 billion by divesting from US equities and in March the government doubled PIF’s stake in the state oil giant Aramco to 16 percent. All 22 of the acquisitions it made in 2023 were local.

“The fund is becoming more domestically oriented,” said James Swanston, a Mena specialist at Capital Economics in London, adding that PIF was bearing more of the burden of funding Vision 2030 projects.

In February PIF’s governor Yasir Al Rumayyan told a Saudi investment summit in Miami that the fund would increase its annual capital spending from around $50 billion a year to $70 billion from 2026. It will also reduce the share of external investments from 30 percent to 20-25 percent.

This is likely to mean the Vision 2030 goal of PIF assets reaching SAR7 trillion ($1.9 trillion) will be shelved.

The International Monetary Fund has lowered its forecast for Saudi Arabia’s GDP growth this year, citing the impact of Opec+ output cuts. The IMF sees a breakeven oil price for Saudi Arabia of $96 per barrel; Brent crude is now around $79-80.

Chiro Ghosh, vice president of financial institutions at Sico investment bank in Bahrain, said PIF was still well-placed to carry out the giga-projects.

“The Saudi government’s financial position is fairly strong to carry on with the execution of its massive projects,” Ghosh said, pointing to the $35 billion of debt raised by various Saudi institutions since the beginning of the year.