Saudi wealth fund PIF's asset base grew 29% in 2023 on continued investment momentum

Annualised returns for the kingdom's investment arm rose to 8.7 per cent last year

The Riyadh Skyline. PIF said its returns were primarily driven by investments within Saudi Arabia. AFP

Saudi Arabia's Public Investment Fund, the kingdom’s sovereign investment arm, said its assets under management jumped 29 per cent to 2.87 trillion Saudi riyals ($765 billion) in 2023 as it continues to build its Saudi holdings and diversify its international portfolio of assets.

The annualised returns for the sovereign wealth fund since 2017 rose to 8.7 per cent in 2023, up from 8 per cent a year earlier, the PIF said in its annual report published on Monday.

The shareholders' returns were “primarily driven by investments within Saudi Arabia, as well as international portfolio growth, as PIF continued to forge strong partnerships and enhance shareholder value”, the fund said.

The jump in the value of the PIF’s assets was supported by the transfer of a 4 per cent Saudi Aramco stake to one of its subsidiaries, as well as the appreciation in its equity portfolio driven by the rally in global stocks last year.

“During a year of progress and widespread achievement, PIF has continued to deliver on its mandate as the driving force of Saudi Arabia’s sustainable economic transformation and diversification,” PIF governor Yasir Al Rumayyan said.

“As a long-term investor and catalyst of change, PIF continues to invest in high-impact projects, companies and partners that are diversifying the Saudi economy, creating new opportunities for investment and shaping the global industries of the future.”

The fund has increased its global reach, unveiled giga-projects, launched portfolio companies and delivered “ahead of financial return targets – in line with the goals of its Vision Realisation Programme (VRP) 2021-2025”, he added.

The fund is the central plank of the kingdom’s Vision 2030 programme, which aims to cut its dependence on oil. The PIF, along with its related organisations, is driving investment into key areas including finance, health care, sport, renewables, technology, the automotive industry, property, aerospace, defence, entertainment, leisure, retail and mining.

The PIF’s investment push has also gained momentum abroad where it holds stakes in companies including Meta and Alphabet.

The fund’s international portfolio last year reached 586 billion riyals, a 14 per cent year-on-year rise, with international strategic investments climbing to 249 billion riyals, its diversified international assets reaching 146 billion riyals and international equity portfolio jumping to 190 billion riyals, according to the fund's annual report.

The PIF said it was “well ahead” of its target for international investments.

The fund in-house managed 85 per cent of its investment portfolio, while the remaining 15 per cent was handled by external managers.

The PIF’s international investments accounted for 20 per cent of its aggregate portfolio, as opposed to 76 per cent for investments in the domestic market. The fund’s treasury holdings accounted for about 3 per cent of its investments at the end of 2023.

The fund is a major stakeholder in public and private companies at home. Its domestic holdings include Saudi mining and mineral giant Maaden, petrochemicals major Sabic and the kingdom's biggest lender, Saudi National Bank.

In aggregate, the PIF launched 23 companies by the end of last year and helped create more than 730,000 jobs in the Saudi economy.

Last year, the fund continued to make significant investments in the domestic market including the launch of Riyadh Air – Saudi Arabia’s new national carrier.

It also launched the Electric Vehicle Infrastructure Company (EVIQ), which aims to boost the adoption of EVs in Saudi Arabia. The fund also launched Lifera, a new pharmaceutical investment company. Al Balad Development and Ardara were new additions to the kingdom’s real estate sector.

“These highlights are just a few examples of the many achievements involving the nation’s giga-projects and PIF’s 200-plus portfolio companies across the Middle East and North Africa,” the fund said.

The PIF’s total net cash returns in 2023 for both its Saudi sector development investments and its Saudi equity holdings reached 42 billion riyals, exceeding its 20-billion riyal target.

“Saudi Arabia's economic performance in 2023 demonstrated resilience and adaptability amid a challenging economic landscape,” Mr Al Rumayyan said.

“The outlook for the Saudi economy remains positive, supported by strong non-oil GDP [gross domestic product] growth, robust consumption spending and expedited project implementation.”

However, geopolitical risk, conflicts and economic uncertainty, both within the region and globally, can potentially affect oil prices and the wider financial landscape, which highlights the need to “continue building economic resilience and investing in economic diversification”, he added.

Building on the momentum achieved over the first three years of the kingdom’s Vision Realisation Programme, PIF said it aims to deliver “even greater economic impact”.

The sovereign fund has set ambitious goals of increasing its total assets under management to approximately 4 trillion riyals, driving PIF and its subsidiaries’ contribution to non-oil GDP to a cumulative 1.2 trillion riyals.

“PIF and its subsidiaries aim to contribute to 60 per cent of local content and increase cumulative non-governmental investment to 1.2 trillion riyals, encompassing both local and foreign direct investments,” the PIF said.

“These ambitious targets reflect PIF’s strategic role in diversifying the Saudi economy beyond oil, fostering economic growth and driving investment in Saudi Arabia’s future.”