Vision 2030: Saudi Arabia’s Sovereign Wealth Fund Expands to $2 Trillion AUM 1

Gulf SWFs are betting on technology

Technology sector investments by sovereign wealth funds are on the rise in the Gulf area. The Middle East (GULF) (GAF) is home to 3 out of 10 of the most active sovereign wealth funds in this regard; the Kuwait Investment Authority (KIA), the Qatar Investment Authority (QIA), and the Public Investment Fund of Saudi Arabia (PIF).

  • The KIA, with $592 billion assets under management (AUM) is invested in the accommodation rental platform BedyCasa along with Bpifrance.
  • The QIA, with $335 billion AUM, is co-funding the transportation network company Uber, along with Saudi Arabia’s PIF. The QIA has also invested into Flipkart.
  • The PIF of Saudi Arabia (KSA) has about $160 billion assets under management

Vision 2030: Saudi Arabia’s sovereign wealth fund to expand to $2 trillion AUM

Under the National Transformation Plan (NTP) and the Vision 2030, Saudi Arabia has set a target of $2 trillion as the eventual value of PIF’s assets under management. This would be twice the size of Norway’s Government Pension Fund Global; currently the world’s largest sovereign wealth fund.

According to data from CB Insights, the government of Saudi Arabia is also committed to increasing the fund’s investment in technology (XLK):

  1. In June 2016, the PIF invested about $3.5 billion in Uber
  2. In October 2016, the government announced that the PIF would partner with Japan’s SoftBank Group (SFTBY) in order to create a $100B tech investment fund.
  3. In November 2016, the fund participated in a $1 billion round of funding for the UAE-based e-commerce company Noon.

Sovereign wealth funds consolidating

Abu Dhabi is in the process of finalizing the merger of two of its largest sovereign wealth funds -Mubadala Development and International Petroleum Investment Company (IPIC) – to form a new $125 billion investment powerhouse in the Arabian Gulf. The combined entity would be known as Mubadala Investment Co. The creation of Mubadala Investment Co should result in cost savings and efficiencies, and at the same time enable the new entity to aggressively pursue growth by leveraging on both entities’ portfolios. IPIC already has stakes in about 18 companies encompassing oil and gas exploration and production, marketing, petrochemicals and power in places like Kazakhstan, Austria, Pakistan, and Portugal.

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