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Saudi Arabia’s USD 925 billion sovereign wealth fund, the Public Investment Fund (PIF), is planning a major management reorganization to address rising costs and enhance investment success.
Image Source: Arab News
Saudi Arabia’s USD 925 billion sovereign wealth fund, the Public Investment Fund (PIF), is considering a reorganization that would shift some internal responsibilities from its governor, Yasir Al-Rumayyan, to other managers. This move comes as the fund seeks to focus on investments with higher success potential amid rising costs, according to sources familiar with the matter.
The PIF, which is central to Crown Prince Mohammed bin Salman’s Vision 2030 economic diversification plan, is scaling back some of its grandiose projects, including NEOM, a vast urban and industrial development along the Red Sea. Notably, “The Line,” a futuristic city project within NEOM, is under revision due to escalating costs.
In addition to internal restructuring, the PIF aims to attract more foreign investment and may review expenses, including high consultancy fees from firms like BCG and McKinsey. A source indicated, “The fund may combine some business lines and create new ones.”
This reorganization would be the most significant management change since Crown Prince Mohammed appointed Rumayyan in 2015. Under Rumayyan, the PIF’s assets have grown from around USD 150 billion to USD 925 billion, and he remains a prominent figure in both Saudi Arabia and the global investment community.
Image Source: Arab News
The PIF has made high-profile investments in various sectors, including financial services, aviation, tourism, and industry. It also owns significant stakes in international entities like Uber, Blackstone, and SoftBank, and controversially backed a new international golf series, leading to accusations of “sportswashing.”
Despite its vast investments, Saudi Arabia continues to rely heavily on oil revenues, and the country is facing increased public spending demands. Lower oil prices and production cuts contributed to a fiscal deficit of USD 21.6 billion last year, with a similar shortfall expected this year.
To diversify its funding sources, the PIF raised USD 5 billion through a bond sale in January and USD 3.5 billion from a sukuk in October, with more debt sales planned. Additionally, Aramco transferred an 8% stake to the PIF in March, doubling the fund’s holding in the state-owned company to 16% and providing access to lucrative dividends.
A spokesperson for PIF declined to comment on the ongoing discussions, and both BCG and McKinsey did not provide immediate responses.
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