Saudi Arabia’s wealth fund retreats from international investments

Saudi Arabia’s sovereign wealth fund plans to scale back the share of its international investments by about a third, drawing a line under the past decade’s multibillion-dollar global spending spree as it refocuses on the domestic economy.

The Public Investment Fund, which has about $930bn worth of assets, said it intended to cut the proportion of funds invested overseas to between 18 and 20 per cent, down from 30 per cent.

PIF governor Yasir al-Rumayyan told the Future Investment Initiative conference on Tuesday in Riyadh that initially most of the fund’s investments were domestic Saudi projects.

“But then [the proportion of international investments] increased from 2 per cent all the way up to 30 per cent,” he said. “Now our target is to bring it down to a range between 18 to 20 per cent.”

However, he added that “the absolute dollar amount is still growing . . . The dollar amounts are increasing.” The PIF’s goal is to reach total assets under management of $2tn by 2030.

As the PIF comes under pressure to deliver returns and on its vast array of domestic commitments, it has been putting more conditions on mandates for fund managers, telling them it wants to see more investment in Saudi Arabia if it is going to commit to new funds.

The wealth fund has already sold down its stake in BlackRock, and disposed of its holdings in Carnival, the cruise liner company, and entertainment group Live Nation.

According to filings at the US Securities and Exchange Commission, the PIF’s traded stocks in the US fell from about $35bn at the end of 2023 to $20.5bn on March 31, before stabilising in the second quarter at $20.6bn.

The PIF has been at the heart of a major plan launched by Saudi Crown Prince Mohammed bin Salman to diversify the kingdom’s economy away from its dependence on oil revenues.

It had previously made waves with a string of high-profile deals, including pumping $45bn into SoftBank’s Vision Fund in 2016 and $20bn into a Blackstone infrastructure fund the following year.

The fund has also made splashy acquisitions including Newcastle United football club and bankrolled ventures such as the LIV Golf professional tour.

Rumayyan said international investors who had previously sought funding from the PIF were also shifting their approach.

“We’re more focused on the domestic economy and we’ve been achieving and doing so many big things,” he said. Now, he said, there were more “calls for co-investments” with the PIF instead of “people who want us to invest or take our money”.

Rumayyan did not say when the PIF aims to meet its new target for international investments.